Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — HONG KONG

Constitution

2. Mr. Rankin: asked the Secretary of State for the Colonies what preparatory steps he is taking to enable the people of Hong Kong to achieve independence or some other status they have freely chosen.

The Secretary of State for the Colonies (Mr. Frederick Lee): There are obvious limitations on Constitutional development. The Hong Kong Government is examining the problems of local Government and will be consulting public opinion on changes in the present arrangements.

Mr. Rankin: Is my right hon. Friend aware that this Government have made a definite promise in their present programme to give the people of Hong Kong the right to govern themselves? Is he going back on that promise? If he still sticks to it, would he take the preliminary step of enabling them to elect two of their own people by popular election to the Legislative Council?

Mr. Lee: I cannot accept my hon. Friend's wording about what the Government have promised Hong Kong. I am aware that there is a need for looking at what is happening there. I will be there in August myself and will look at the matter then.

Mr. A. Royle: Will the right hon. Gentleman resist pressure from his hon. Friend in view of the damage which might be caused to Hong Kong's relations with China as a result of increasing tension following constitutional development in the Colony of Hong Kong?

MAURITIUS

Banwell Report

4. Mr. Wall: asked the Secretary of State for the Colonies if he will make a statement on the constitutional position in Mauritius, following the publication of the Banwell Report.

12. Mr. Fisher: asked the Secretary of State for the Colonies whether he will make a statement about the implementation of the Banwell Commission Report on Mauritius, arising out of the visit of the Parliamentary Under-Secretary of State for the Colonies to the Colony earlier this week.

15. Mr. James Johnson: asked the Secretary of State for the Colonies if he will make a statement about the visit of the Parliamentary Under-Secretary of State to Mauritius for the purpose of assessing public reaction to the findings of the Ban-well Commission Report.

Mr. Frederick Lee: My hon. Friend the Parliamentary Under-Secretary of State is now discussing the report in Mauritius and it is early yet to think of any statement.

Mr. Wall: Does the right hon. Gentleman adhere to his previous statement in the House that he accepts this Commission's report? Is he also considering the possibility of a referendum and the effect which these discussions are likely to have on the date of independence?

Mr. Lee: As I have intimated to the House, my hon. Friend is now out there. I hope that he will not be there much longer. I would prefer not to say any more at the moment.

Mr. Fisher: Does the right hon. Gentleman think that there is any prospect of compromise within the framework of the Banwell Commission proposals, which he has already accepted in principle? If so, would he consider holding further talks with the leaders of political opinion in Mauritius soon so as to prevent any delay in the independence date?

Mr. Lee: The hon. Gentleman is right. We are looking at the general content of Banwell and it will be helpful if my hon. Friend is able to get agreement. If


he is not, we shall have to reconsider the position.

Mr. James Johnson: Is it not a fact that the Mauritius Parliament have formed a coalition Government since the election, of the Labour Party, the Muslim Party and the Independence bloc, who are deeply shocked by the findings of the Commission; further, that the only party in opposition, the Parti Mauricien, which is usually termed the "capitalist bourgeoisie", is delighted? Would my right hon. Friend consider convening a conference in London to look at the whole matter?

Mr. Lee: It is difficult to add to what I have said. There was a conference in London some time ago which did not make much progress on this issue.

BRITISH HONDURAS

New Capital

5. Dame Joan Vickers: asked the Secretary of State for the Colonies what action he is taking to provide adequate funds for the building of the new capital city in British Honduras.

Mr. Frederick Lee: As stated when approval of this project was announced in March, 1965, the cost is estimated to be of the order of £4 million and the major part of this will be provided (subject to Parliamentary approval) from grants and loans made available by Her Majesty's Government.

Dame Joan Vickers: When will the right hon. Gentleman expedite this? This territory up to date has been fairly peaceful. Regrettably, there have been several riots, not connected with this, but the Honduras have never been the same since Hurricane Hattie, and I should have thought that a new capital would give the people fresh inspiration for the future.

Mr. Lee: The Premier was over here some time ago, when arrangements were made about the kind of development which we are now seeing. He discussed questions of finance with the Ministry of Overseas Development. I do not think that I can add anything at the moment.

GIBRALTAR

Economic Restrictions

6. Mr. Colin Jackson: asked the Secretary of State for the Colonies what effect the recent further restrictions on commercial relations between Gibraltar and Spain have had on the territory's economy; and in the circumstances what further assistance Great Britain proposes to offer to Gibraltar.

Mr. Frederick Lee: As I said in reply to my hon. Friend the Member for Goole (Mr. Jeger) on 23rd June, the reports of further restrictions have been denied by the Spanish Ministry of Foreign Affairs. The reports themselves affected some businesses in Gibraltar, but the Governor is not in a position to assess the effects exactly. As regards the second part of the Question, I have nothing to add to the reply that my right hon. Friend the Minister for Overseas Development gave to the hon. Member for Surbiton (Mr. Fisher) on 28th June.

Mr. Jackson: I thank my right hon. Friend for that reply. Would he not agree that the territory of Gibraltar is today being subjected to an economic and psychological cold war campaign by the Government of Spain? Should we not make absolutely sure that whatever happens the people of Gibraltar do not suffer as a result of this?

Mr. Lee: I think that is a little outside the terms of the Question. All I was asked was about the present position, and I know of no further deterioration.

Mr. Maudling: Are the Government continuing discussions with the Spanish Government about Gibraltar, and are these new restrictions being raised?

Mr. Lee: The Government will continue the discussions and in general the question of restrictions will be raised and continue to be raised.

Constitution

9. Mr. Wall: asked the Secretary of State for the Colonies what constitutional changes are proposed for Gibraltar.

Mr. Frederick Lee: As the hon. Member was informed on the 18th November 1965, it is the view of Her Majesty's Government, which is shared by the


elected members of the Gibraltar Legislative Council, that further constitutional advances are not at present desirable.

Mr. Wall: Is the Minister aware that what the people of Gibraltar want is an assurance that their children and their children's children will remain British and that this can be given only by a change in the constitution? Will he agree that the only alternatives are integration or free association with this country?

Mr. Lee: I have reminded the hon. Member that the present constitution came into force only in August, 1964, and the Legislative Council has itself expressed satisfaction with it. I am not unmindful of the feelings of the people of Gibraltar on the matter to which he has referred.

Mr. Maudling: In the continuing conversations with the Spanish Government, will the right hon. Gentleman confirm that there can be no question whatever of ceding any sovereignty in Gibraltar against the wishes of the local inhabitants?

Mr. Lee: That is more properly a question for my right hon. Friend the Secretary of State for Foreign Affairs. [HON. MEMBERS: "No."]—Oh, yes, the question of relationship with a foreign Power is not for the Secretary of State for the Colonies, but we are not unmindful of the comments which the right hon. Member has made.

Mr. Maudling: Surely the right hon. Gentleman must be concerned with the well-being of people in the Colonies? Surely he can give an absolutely straight answer on this fundamental point?

Mr. Lee: The right hon. Member knows that I am in constant touch with the Chief Minister and Governor of Gibraltar. I am well aware of the opinions of the Gibraltarians and I have great sympathy with their point of view.

Frontier Restrictions

10. Mr. George Jeger: asked the Secretary of State for the Colonies what recent information he has received from the Colonial Office in Gibraltar on the imposition of further restrictions at the Spanish frontier.

Mr. Frederick Lee: I invite my hon. Friend's attention to the reply which I

gave him on 23rd June and to the further information which my hon. Friend the Minister of State for Foreign Affairs gave yesterday in reply to my hon. Friend the Member for Harrow, East (Mr. Roebuck).

Mr. Jeger: Would not my right hon. Friend agree that the information he gave me last week in reply to my Question had as its source Spanish propaganda bulletins and not information from our Colonial Office representatives in Gibraltar? Would he not regard the latter as more reliable and please answer my Question?

Mr. Lee: I thought I had answered the Question. I confirm again that there has been no case since 17th June of any person being refused permission to take small quantities of goods through Algeciras.

Mr. Palmer: Does not my right hon. Friend think, in view of these further restrictions imposed on British subjects in Gibraltar, that these talks with the Franco Government should be brought to an end?

Mr. Lee: I have said that since 17th June I know of no restrictions which have been added to the present ones.

Mr. Sandys: Can the right hon. Gentleman say what it is they are talking about at such length?

Mr. Lee: I think it is the preliminaries of discussion as to what they are going to talk about later.

BECHUANALAND

Secondary Education

7. Mr. Judd: asked the Secretary of State for the Colonies how many school pupils in Bechuanaland qualified last year for secondary education; how many of these pupils were able to secure places at secondary schools; how many qualified teachers there are at the secondary schools; and how many of these teachers are expatriates.

Mr. Frederick Lee: The figures are: 1,539; 535; 47; and 42. There are in addition seven A level volunteer teachers.

Mr. Judd: Would not my right hon. Friend agree that on the eve of independence this is a very sad state illustrating the dependence on external assistance? Can he assure us that in talks


about independence there has been consideration of stepping up educational facilities in Bechuanaland?

Mr. Lee: As my hon. Friend knows, internal self-government has been with Bechuanaland since March last year. There is a question of priorities which that Government decide upon. I do not know that we can affect that at this stage.

Community Development Department (Staff)

8. Mr. Judd: asked the Secretary of State for the Colonies what is the present staff strength of the Community Development Department in Bechuanaland; and now many additional staff are required to introduce a viable programme throughout the territory.

Mr. Frederick Lee: Two Community Development officers, six assistant Community Development officers and 18 Community Development assistants. Ideally, the Bechuanaland Government would like to have an additional 92 trained village workers plus the necessary supervisory staff.

Mr. Judd: Will my right hon. Friend agree that the building up of central administration in Bechuanaland must be reflected in a building up of administrative resources at local and provincial level? Can he give evidence of what support we are giving in this respect?

Mr. Lee: I agree with the general proposition my hon. Friend puts to us. The administrative costs of the Food for Work scheme will be met from CD. and W. funds. Talks will be held in London next month on financial aid to Bechuanaland after independence.

Mr. James Johnson: Will my right hon. Friend accept the general view in Africa that Africanisation of the Civil Service and services of this kind is important, and no more important than here in view of the contiguity of South Africa? Will he look at this matter particularly bearing in mind Question No. 7?

Mr. Lee: We are helping in every way we can, and will continue to do so. Three administrative officers and eight executive officers are being employed in the organisation of famine relief projects.

BARBADOS

Constitutional Conference

11. Mr. Fisher: asked the Secretary of State for the Colonies whether he will make a statement about the constitutional conference on Barbados.

Mr. Frederick Lee: The conference is still in progress. I hope to be able to make a statement next week.

Mr. Fisher: Will the right hon. Gentleman say whether he favours elections before independence or after independence, bearing in mind that elections are due very shortly in the Colony anyway, as he knows, and that this is a very controversial point both in Barbados at present and, I understand, at his own constitutional conference?

Mr. Lee: It is a point which has not escaped the attention of delegates at the conference. I would not at this stage like to add anything which might make the conference more difficult to pursue.

FIJI

Dr. J. Cairns

14. Mr. Winnick: asked the Secretary of State for the Colonies why Dr. J. Cairns, a member of the Australian Parliament, was not allowed to address public meetings on his visit to Fiji.

1. Mr. Russell Kerr: asked the Secretary of State for the Colonies whether he is aware of the restrictions recently placed upon Dr. J. F. Cairns, a Member of the Australian House of Representatives, by the Governor of Fiji; by what authority the Governor acted; and whether he will make a statement.

Mr. Frederick Lee: Dr. Cairns was restricted under the Immigration Ordinance from holding public protest meetings against the French nuclear tests. The Fiji Government considered such meetings would have caused unnecessary alarm in view of Fiji's distance from the test area.

Mr. Winnick: Will the Colonial Secretary not agree that it is not a crime to protest against nuclear tests? Could he tell the Governor that this ban on an Australian Labour M.P. was without any justification?

Mr. Lee: My hon. Friend may like to know that Dr. Cairns arrived in Fiji on 29th May without notifying the Governor of an intention to hold any public meeting.

ECONOMIC AFFAIRS

Incomes Norm

18. Mr. Ashley: asked the First Secretary of State and Secretary of State for Economic Affairs if he will replace the existing incomes norm of 3 to 3½ per cent. with two norms, one of 2 per cent. for the majority and one of 5 per cent. for those whose increase in income has fallen behind the average.

The First Secretary of State and Secretary of State for Economic Affairs (Mr. George Brown): No, Sir. Since the figure of 3–3½ per cent. is an average it takes account of the need for variations.

Mr. Ashley: Is my right hon. Friend aware that the real danger to the prices and incomes policy will arise not from the feeble attacks of hon. Members opposite but from any failure by the Government to act with vigour and determination in the interests of lower-paid workers?

Mr. Brown: Yes, Sir, I have that point very much in mind.

Mr. Park: Would the First Secretary bear in mind that the real problem here is not one of restricting incomes but of increasing productivity? Can he tell the House when the Government's proposals for a national productivity conference are likely to be implemented, and what encouragement is being given to the formation of productivity committees at all levels of industry?

Mr. Brown: On the first point, I think that that is an over-simplification. It is not as simple as all that. There are, after all, very many workers whose contribution to productivity is not measurable in the way that other people's are. There are many people, particularly in the public services, who must be looked after in another way. As to the rest of his question, we are at the moment consulting the T.U.C, and the C.B.I, and the National Economic Development Office about the arrange-

ments for holding that conference, and I hope to be able to give a more detailed answer very soon.

Prices and Incomes Policy

20. Mr. G. Campbell: asked the First Secretary of State and Secretary of State for Economic Affairs whether he is satisfied with recent results of the Government's prices and incomes policy; and if he will make a statement.

Mr. George Brown: I shall very shortly lay proposals for legislation before the House. I shall also be discussing with both sides of industry ways of making the agreed policy more effective.

Mr. Campbell: Does the First Secretary regard the recent settlement with the seamen as being within the aims of his incomes policy?

Mr. Brown: We have made that clear throughout the discussions that have gone on in connection with this matter. The Pearson Committee inquiry, among other things, had terms of reference that clearly covered this, and we have made it clear that in our view the recommendations on which the dispute was ultimately settled were not only fair, reasonable and just, but in the interests of the seamen, the shipowners and the nation.

Mr. Orme: How does my right hon. Friend see the incomes policy in relation to the settlement for the doctors and that for the seamen? Does he not think that these two settlements are incompatible and show that the prices and incomes policy is not working in the manner in which my right hon. Friend intimated to the House?

Mr. Brown: No, Sir. I do not see it that way at all. In the case of the doctors, as in the case of the seamen, and as in other cases, the issues were considered by an independent body whose views were in turn considered by the Government against the background of the policy. I think that the decision in each case can be held to be in accordance with it. I must point out to my hon. Friend that so long as we have a society in which rewards differ according to the work which one performs, then one is bound to get differing adjudications in matters of this kind.

Mr. Iain Macleod: Can the First Secretary expand a little on the first part of his main Answer for the convenience of the House? Does he expect, for example, to get to the Second Reading before the Summer Recess?

Mr. Brown: I do not think that that is a question for me. It should be put to the Leader of the House.

Sir C. Osborne: Despite pressure from both sides of the House and from outside, will the First Secretary give a promise that he will not abandon this policy, as it is the only hope of economic salvation for this nation?

Mr. Brown: In return for my giving the hon. Gentleman that promise, which I gladly do, can I have a promise from him that he will try to get his hon. and right hon. Friends to help me more?

European Economic Community

22. Mr. Zilliacus: asked the First Secretary of State and Secretary of State for Economic Affairs to what extent it is still the Government's policy to insist on the right to organise the United Kingdom economy, including control of immigration and the movement of capital, and planning for social purposes, as among the conditions for entering the Common Market.

Mr. George Brown: We shall certainly ensure that our interests are safeguarded on these points.

Mr. Zilliacus: Is not my right hon. Friend aware that the Rome Treaty prohibits any government control of the flow of capital or movement of labour between the members of the European Economic Community and, furthermore, rules out public ownership and planning harnessed to social priorities and purposes? Will my right hon. Friend give an assurance that the Government will resist any such restrictions on our rights to plan our economy?

Mr. Brown: I do not take the view that the Treaty of Rome limits our freedom to plan our economy, but the whole question of these issues which the hon. Gentleman raises are among those which we are now studying and on which we must be ready with answers when the moment comes.

Mr. Sandys: While recognising that the Government will have to negotiate certain safeguards for British and Commonwealth interests, can the right hon. Gentleman assure us that it is not the Government's intention to make conditions which would be inconsistent with the basic principles and institutions of the Treaty of Rome? Would he consider publishing the speech made the other day by the Chancellor of the Duchy of Lancaster at the W.E.U. meeting, which I understand contained a statement of the British Government's requirements?

Mr. Brown: Certainly. The speech made by my right hon. Friend at the W.E.U. meeting was in accord with previous statements made in this House and with my Stockholm speech. I will certainly put to him the suggestion made by the right hon. Gentleman on the other matters. It is certainly our intention to see that arrangements are made to safeguard our own proper and essential national interests, as well as others, which arise—for example, those of other Commonwealth members. We must bear in mind that every country which is a member of the Economic Community took very great care and spent a good deal of time in looking after its own essential interests before it joined. I do not believe that anyone would expect Britain to do any differently.

Mr. Shinwell: Before the Chancellor of the Duchy makes another speech at the Western European Union or elsewhere, would my right hon. Friend convey to him the details in this Question which he finds acceptable?

Mr. Brown: If my right hon. Friend will read the speech of my right hon. Friend the Chancellor of the Duchy he will find no need for any alarm or disturbance on his part. While we will keep the closest contact with my right hon. Friend and other hon. Friends, I do not think that I can go so far as to say that no Minister will ever make a speech until he has had it cleared in all quarters of the House.

United Nations (Economic Commission for Europe)

23. Mr. Zilliacus: asked the First Secretary of State and Secretary of State for Economic Affairs whether he will take


the initiative in the Economic Commission for Europe of the United Nations to make that body the connecting link between the European Free Trade Association and the European Economic Community in the West, and Comecon in the East, in order to promote East-West trade and all-European co-operation on such matters as investment, banking and finance, transport and communications and the distribution of power.

Mr. George Brown: I do not think that such an initiative would be fruitful.

Mr. Zilliacus: Is my right hon. Friend aware that many of us on these benches would much prefer the Government to make a real effort, through the United Nations, to tie the whole of Europe together in a network of common interest rather than to try to muscle into the capitalist, cold-war west end of Europe and thereby perpetuate the division of Europe?

Mr. Brown: I certainly do not accept the words with which my hon. Friend poses the problem. I am bound to say that tying the whole of Europe together in the way that he described would be a formidable undertaking at the moment.

Dr. David Owen: Is my right hon. Friend aware that many of us on this side of the House look towards our entry into the Common Market as a first step and do not exclude that we can continue from there to join a wider Europe?

Mr. Brown: I am obliged to my hon. Friend. He will remember that at Stockholm I was at some pains to point out that in our view Europe does not end where the Communist countries begin.

Industrial Reorganisation Corporation

24. Mr. St. John-Stevas: asked the First Secretary of State and Secretary of State for Economic Affairs when he will introduce legislation to set up the Industrial Reorganisation Corporation.

Mr. George Brown: Very soon.

Mr. St. John-Stevas: Can we have an assurance from the First Secretary that the proposed I.R.C. will be used to advance the national interest and will not be used as a means of advancing Socialist dogma by bringing in nationalisation by

the back door, especially nationalisation of the aircraft industry?

Mr. Brown: All that I do is, of course, in the national interests. The hon. Gentleman must lose his obsession with the idea that anything which cannot be labelled Conservative dogma is thereby not in the national interest.

National Plan (Progress Review)

25. Mr. Dickens: asked the First Secretary of State and Secretary of State for Economic Affairs if he will publish an annual review of progress under the National Plan.

Mr. George Brown: My present intention is to publish a review of progress under the National Plan this autumn. There will, of course, be further reviews published later.

Mr. Dickens: Is my right hon. Friend aware that we on this side of the House welcome the statement this afternoon? Is he further aware that we regard it as indispensable to the democratic economic planning for him to keep the National Plan under continuous annual review both in the country and in this House?

Mr. Brown: I am much obliged.

Mr. Iain Macleod: Can the First Secretary say whether this annual review is based on new information, obtained by questionnaire or in other ways from industry, or is it a report of the follow-up through the "Little Neddies" and other bodies?

Mr. Brown: I was very careful not to tie myself to there necessarily being an annual review. Whereas one wishes to keep a plan under regular review, one does not want everyone's attention so taken up with reviewing it that they have not much time left to implement it. As to the review which we are making this year, industry has been consulted and we are now collecting the results of that consultation. The review did not take the form of a full-scale questionnaire, as was the case last year.

Sir Harmar Nicholls: Has the First Secretary noticed that the payroll tax cuts right across the National Plan?

Mr. Brown: There is a Question down on that subject later, but in any case I have not noticed what the hon. Gentleman said.

Early Warning Procedures (Dividends)

26. Mr. Dickens: asked the First Secretary of State and Secretary of State for Economic Affairs if he proposes to include dividend distribution in the forthcoming legislation setting up an early warning procedure for prices and incomes.

Mr. George Brown: I would ask my hon. Friend to await the publication of the Bill.

Mr. Dickens: May I draw my right hon. Friend's attention to the fact that, between 1960–65. whereas productivity rose by 14 per cent. dividend distribution rose by 59 per cent.? May I also draw my right hon. Friend's attention to the fact that there is no realistic prospect of a successful incomes policy being launched which does not cover unearned income?

Mr. Brown: I have made it clear from the very beginning that the present productivity, prices and incomes policy, unlike some previous attempts, is concerned with all forms of income, however they arise. I have said many times that I deplore the increased dividend payments, particularly in the earlier part of this year, and the Chancellor and I have not only said but shown that we are ready to take action where that seems to be required.

Prices and Incomes Board (References)

27. Mr. Bruce-Gardyne: asked the First Secretary of State and Secretary of State for Economic Affairs what instructions are given to the members of Her Majesty's Government, when referring wage or salary claims or price increases to the National Board for Prices and Incomes, with regard to drafting the terms of reference so as to enable the Board to produce a properly considered report.

Mr. George Brown: The terms of reference are carefully drafted to enable the Board to produce properly considered reports.

Mr. Bruce-Gardyne: Has the right hon. Gentleman noticed the Board's Report on Scottish teachers' salaries, and has he particularly noticed that the Board pointed out that the terms of reference

of this reference were in flat contradiction to the Government's economic policy? If the right hon. Gentleman's colleagues do not observe the incomes policy, how-can he expect private industry to do so?

Mr. Brown: First, I noted the Report. Secondly, it does not contain what the hon. Gentleman said it contains. Thirdly, all of us are observing the policy.

Military Expenditure (National Plan)

29. Mr. William Hamilton: asked the First Secretary of State and Secretary of State for Economic Affairs what estimate he has made of the effects of British military expenditure overseas on the implementation of the National Plan.

The Under-Secretary of State for Economic Affairs (Mr. William Rodgers): As my hon. Friend knows, the Government have decided to restrict the Defence Budget in 1969–70 to the equivalent of the total in the 1964–65 Estimates and within that total to bring about an absolute reduction in that part which is incurred overseas. This is taken account of in the National Plan.

Mr. Hamilton: Is it not a fact that the purchase of military aircraft from America was undertaken after the publication of the National Plan and, furthermore, the meeting of the targets in the National Plan was based on an estimated national growth of about 4 per cent. which we are nothing like achieving? If this is the case, how can we expect to meet the targets in housing, hospitals, schools, and so on, unless we make further reductions in defence expenditure?

Mr. Rodgers: I take a more optimistic view than my hon. Friend of the prospects of achieving the targets in the National Plan. But in any review of the plan which takes place from time to time, we shall take account of all new factors which have arisen, including any relating to defence expenditure.

Sir C. Osborne: On what factors does the hon. Gentleman base his more optimistic view of the future?

Mr. Rodgers: I hold a more optimistic view than that of my hon. Friend the Member for Fife, West (Mr. William Hamilton) that the targets in the plan


might not be achieved. There is a very good prospect that by 1970 we shall do as well as we expected.

Mr. Zilliacus: Is it not a fact that in the Government's report on the economic situation of 26th October, 1964, it was said that we should not be able to pay for our economic and social policies unless we cut defence expenditure below the then sum of £2,000 million, even after the increase in the gross national product had attained 4 per cent. a year. As we have barely attained 2 per cent. and are still maintaining defence expenditure at the level of £2,000 million, how does my hon. Friend expect our plan to succeed?

Mr. Rodgers: The achievements of the targets in the plan are related to things other than simply defence expenditure, but, as I have said, we have this question very much in mind and we shall endeavour to make sure that what we have to spend, for other and defensible reasons, on defence overseas will be allowed for in the National Plan.

Mr. Barber: Is the hon. Gentleman really saying that in the light of the most recent figures published he thinks that the target for the increase in industrial production will be reached?

Mr. Rodgers: I am saying that I think that these targets will be reached. We recognised that in the earlier part of the plan period it would be more difficult to achieve a high rate of annual growth.

Industrial Boards (Stock Control)

30. Mr. Moonman: asked the First Secretary of State and Secretary of State for Economic Affairs, in view of the savings to be gained by realistic stock control, if he will urge the industrial boards to publish their own booklets on the lines of, "Gold—in your hands", prepared by the Economic Development Committee for the distributive trades.

Mr. William Rodgers: The need to publish booklets of this kind is very much a matter for the judgment of each economic development committee.

Mr. Moonman: Is my hon. Friend aware that many millions of £s could be saved by realistic stock control throughout industry? Would he comment on

the fact that many managements are extremely inefficient because they fail to recognise this fact, and will he consider the possibility of introducing some method whereby people could have this information?

Mr. Rodgers: I agree with my hon. Friend. The National Economic Development Council asked the Economic Development Committee in 1964 to discuss the whole question of the levels of stocks.

Paper-making Industry

31. Mr. George Jeger: asked the First Secretary of State and Secretary of State for Economic Affairs what discussions he has had with the representatives of the paper-making industry on the implementation of the National Plan in those regions where they are engaged in production.

Mr. William Rodgers: My right hon. Friend maintains close contact with the work of the industry towards its Plan targets through his representative on the Paper and Board Economic Development Committee.

Mr. Jeger: Would my hon. Friend ask his right hon. Friend to have discussions with the Inveresk Paper Group, which proposes to cease paper production at its paper mill at Rawlcliffe, thereby throwing 200 of my constituents out of work? This will undoubtedly affect local regional development. Will my hon. Friend take up this matter with the firm concerned?

Mr. Rodgers: I will certainly take up the matter.

Selective Employment Tax

32. Mr. Palmer: asked the First Secretary of State and Secretary of State for Economic Affairs what changes he will make in the National Plan forecasts for the distributive trades and the service industries to allow for the effect of the Selective Employment Tax.

Mr. William Rodgers: The effects of this tax are among the factors being considered in the review of the National Plan. It is too early to say what precise changes will be made.

Mr. Palmer: Is my hon. Friend aware that the distributive trades have cooperated very fully with him and his Department in working towards the fulfilment of the National Plan and that they have been much discouraged by the Selective Employment Tax? Could not he utter a word of encouragement to them?

Mr. Rodgers: I fully understand my hon. Friend's concern. I know that he has taken the opportunity to raise the matter in the debates on the Finance Bill. We shall watch the effects of this tax. We hope very much that it will not in any way prevent the distributive trades from reaching the targets which we set them in the National Plan.

33. Mr. Palmer: asked the First Secretary of State and Secretary of State for Economic Affairs what changes he proposes to make in regional development plans to allow for the effect of the Selective Employment Tax.

Mr. William Rodgers: None, Sir.

Mr. Palmer: Is my hon. Friend aware that the Selective Employment Tax will work very unevenly in relation to the regions and that the South-West, where there is already unemployment, will be very heavily hit by the contribution which it will have to make to other parts of the country? Is not some such action necessary to help the South-West?

Mr. Rodgers: It is certainly bound to have some effect, but we should not exaggerate this. Such estimates as we have suggest that the incidence will range only from about 1½ to 1¾ per cent. on the total wage and salary bill in the South-East and South-West to about ½ per cent. in the West Midlands. Of course, we shall watch the incidence of the tax.

Mr. Patrick Jenkin: Is it too late for the First Secretary to use his influence with the Chancellor of the Exchequer to try to introduce some element of regional bias into a tax which is particularly suited to bringing a regional influence to bear on our economic affairs?

Mr. Rodgers: We have introduced many means of securing balanced regional development in the last 18 months. As the Chancellor of the Exchequer has said on a number of

occasions, this is a flexible tax which can be used for a number of good purposes.

Mr. Bessell: What representations has the hon. Gentleman received from the Chairman of the South-West Regional Economic Planning Council on the effects of this tax in areas like Devon and Cornwall? Would he state what he considers the effects will be in Scotland and Mid-Wales?

Mr. Rodgers: Advice which we receive from the Economic Planning Councils is confidential. We have looked at the incidence of the tax. It will vary between ½ per cent. and, at the most, 1¾ per cent.

Dr. Dunwoody: Would my hon. Friend assure us that the regional planning bodies, particularly during the first 12 months, will study very closely any possible effects in the regions so that when the time comes to review the working of this tax the enormous advantage of its flexibility can be used to help the hard-core areas of residual unemployment such as those in the South-West?

Mr. Rodgers: I will certainly give that assurance.

BOARD OF TRADE

Advance Factory, Aberdeen

35. Mr. Hector Hughes: asked the President of the Board of Trade what progress he has made in the purchase of the site in Aberdeen for the advance factory announced by him last September; and if he will now specify the site and the use to which he plans to put it

The President of the Board of Trade (Mr. Douglas Jay): I hope negotiations will shortly be concluded for the purchase of a 10-acre site on the Tullos Estate. This site will be large enough to accommodate both the advance factory announced last September and further factory development as required.

Mr. Hughes: Would my right hon. Friend expedite this matter, having regard to the fact that Aberdeen is a particularly attractive area and to the lack of unemployment, the housing facilities and general social amenities?

Mr. Jay: I agree with my hon. and learned Friend about Aberdeen. I am


hopeful that the advance factory will start building next month, which begins tomorrow.

Arms Contracts (Licences)

36. Mr. Frank Allaun: asked the President of the Board of Trade if he will make a statement on the method of licensing arms contracts arranged by the arms salesman, and also state the number and value of licences granted for the last 12 months, and the countries for which licences were granted.

Mr. Jay: The normal processes of inter-departmental consultation will continue. Licences for arms and military equipment are issued with due regard to the political, economic, strategic and security implications of each case. It is not the practice to disclose information about such licences.

Mr. Allaun: In the light of that Answer, are there any stipulations that arms sold to America must not be used in Vietnam? Secondly, would it not be better, for many reasons, to stimulate peaceful engineering exports instead?

Mr. Jay: Of course, as my hon. Friend knows, we are doing a great deal to stimulate peaceful engineering exports all over the world, but the policy in export licensing followed by the Government as far as the arms salesman is concerned will be precisely the same as before—that is to say, that the political decision of the Government will determine what is licensed.

Mr. A. Royle: Will the right hon. Gentleman give an assurance that arms sold to Australia and New Zealand will be allowed to be used in South Vietnam by Service men of those countries?

Mr. Jay: That is obviously another question.

Shipbuilding Industry (Geddes Report)

38. Mr. Rankin: asked the President of the Board of Trade what submissions he has received from the shipbuilding industry in respect of the recommendations contained in the Geddes Report.

The Minister of State, Board of Trade (Mr. Roy Mason): We have received memoranda setting out the position of

the Shipbuilding Conference, the Shipbuilding Employers' Federation and the National Association of Marine Engine Builders, and of the Confederation of Shipbuilding and Engineering Unions.

Mr. Rankin: I thank my hon. Friend for that reply. When he comes to consider the submissions that have been made to him, will he take note of the type of organisation which is now established at Fairfield's in my constituency? Will he regard that as one that ought to be encouraged in a reformed shipbuilding industry?

Mr. Mason: Yes, Sir.

Mr. Blenkinsop: Is my hon. Friend aware of the very considerable progress being made on Tyneside in the implementation of the Geddes Report, both in the combination of the industry and in better relations between employers and unions?

Mr. Mason: It is highly commendable that shipbuilding employers, and, in particular, the unions, have responded so quickly and magnificently to the Geddes proposals. This seems to be a start to a change in the industry.

Mr. Wingfield Digby: In view of the favourable reception of the Geddes Report by both sides of the industry, will the hon. Gentleman press ahead with its implementation and not allow any delays to creep in?

Mr. Mason: The Government's appreciation of the Report will be made immediately and we hope to make an announcement next month.

EDUCATION AND SCIENCE

Laceby (School Places)

41. Sir C. Osborne: asked the Secretary of State for Education and Science what reply he has sent to the petition signed by 1,025 parents with young children in Laceby, near Grimsby, for the provision immediately of a new school to meet the requirements of this developing district; if he will treat this as a matter of urgency; and if he will make a statement.

The Minister of State, Department of Education and Science (Mr. Edward Redhead): My right hon. Friend has replied that it is for the Lindsey Local Education


Authority to plan for any additional school places that may be needed in Laceby. Two new classrooms came into use at the beginning of this school year. Increasing numbers in this area may require further building.

Sir C. Osborne: But is the Minister of State aware that the local education committee replies that it can only go as far as the Secretary of State will provide the money for it to do the work? Is he further aware that this is desperately urgent because our school population has multiplied fourfold? Will he give the authority the power to carry the work out?

Mr. Redhead: I am conscious of the difficulties to which the hon. Gentleman refers but I draw his attention to the fact that the existing school has 270 places and that the present number on the roll is 253. I admit that new housing in the village will increase the demand, but there is time for the local education authority to decide how the increased numbers should be accommodated and it may submit its proposals to my right hon. Friend.

Sir C. Osborne: Owing to the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

HOME DEPARTMENT

Sodium Chlorate

43. Mr. Hooson: asked the Secretary of State for the Home Department what steps have been taken to minimise the possibility of sodium chlorate in a powdered form being used by children to create home-made explosives.

The Minister of State, Home Office (Miss Alice Bacon): The trade is encouraged to adopt suitable safeguards, such as labelling, and to exercise great care before selling this substance to young people. Suitable publicity is also addressed from time to time to science teachers in schools, and the Inspectors of Explosives constantly draw attention to this problem in their annual reports, in articles in scientific journals and in other ways. However, my right hon. Friend proposes to ask his Standing

Advisory Committee on Dangerous Substances to consider as soon as it can, whether any further action might usefully be taken.

Mr. Hooson: While I express my gratitude to the right hon. Lady for that reply, is she aware that 242 injuries to young persons have been caused by this explosive in the last ten years? Would not the simple expedient be not to prevent the making of this explosive but to insist that its sale as a weed killer is only in liquid form?

Miss Bacon: I have written to the hon. and learned Gentleman about this and, as he knows, to make this into liquid form presents certain difficulties because if it is too much diluted it is no use as a weed killer.

Wimbledon Tennis Championships (Police Duties)

46. Mr. Alan Lee Williams: asked the Secretary of State for the Home Department what is the cost to public funds arising from the 40-year practice of detailing an escort of the Metropolitan Police to accompany delivery of daily Wimbledon tennis results to certain members of the Royal Family; and how many policemen are thereby taken away from their normal duties.

Miss Bacon: No police escort is provided for the car which, I understand, is itself hired by the All England Lawn Tennis Club. Three police motor cyclists are on general traffic duties during the championships. They do not leave the vicinity of the club.

Mr. Williams: Is my right hon. Friend aware that, while I am grateful for that reply, I do not think that it is satisfactory? Does not she agree that the police escort was taken off normal police duties and that it would be better for this information to be conveyed through the usual mass media? Will she give an assurance that no other sporting activity receives this privileged treatment?

Miss Bacon: What happened is that the motor cyclists accompanied the car, in which Princess Marina was travelling, through the crowds. After finishing this duty, they escorted an empty hired car to the Royal entrance, where it was said to be urgently required. Unknown to the


police, arrangements had been made between officials and representatives of the Press for a staged photograph to be taken of the car and the messenger used to convey information to the Royal Palaces. The motor cyclists did not leave the vicinity of the Wimbledon ground.

CHANNEL TUNNEL

Q1. Mr. Fletcher-Cooke: asked the Prime Minister if Her Majesty's Government have yet decided to allow the construction of a Channel Tunnel; and if he will make a statement.

The Prime Minister (Mr. Harold Wilson): I have nothing to add to Answers to Questions given yesterday by my right hon. Friend the Minister of Transport.

Mr. Fletcher-Cooke: Is the Prime Minister aware that the right hon. Lady said that work could not possibly begin until 1969 and would be complete in 1974 at the earliest? Will he take the opportunity of the visit of the French Prime Minister to see if together they could not expedite this work and get this tunnel working at least four years earlier?

The Prime Minister: I hope that this is one of the questions that I shall be able to discuss with M. Pompidou next week. I am glad to be able to tell the House that, as far as one can see, the results of the geological survey are more encouraging perhaps than anyone could have hoped and that the latest estimates of the economic possibilities seem to be more encouraging than the last time such estimates were made.

Mr. Rankin: Can my right hon. Friend say whether this is the first step in getting into the Common Market?

The Prime Minister: This will be considered on its own merits whatever the position about conditions under which Britain could join the E.E.C.

EUROPEAN LAUNCHER DEVELOPMENT ORGANISATION

Q2. Mr. R. Carr: asked the Prime Minister by what authority a statement was issued by the Foreign Office on 4th June, 1966, that the latest proposals for

the initial programme of European Launcher Development Organisation did not constitute a sufficient basis for continuing United Kingdom participation in the activities of the organisation in view of the policy of Her Majesty's Government not to withdraw from the European Launcher Development Organisation programme.

The Prime Minister: The statement was issued by my right hon. Friend the Foreign Secretary on behalf of the Government.

Mr. Carr: How does the Prime Minister reconcile that with the contradictor,' statement made by the Minister of Aviation in this House? Does not he agree that if there were any doubt about the interpretation of the Foreign Office statement it was put beyond doubt by the personal statement of the Foreign Secretary himself at London Airport, when he did not feel that it was in our best interests that we should remain a member of the E.L.D.O. organisation, which is in direct conflict with what the Minister of Aviation said?

The Prime Minister: The question is whether one remains a passive member or joins in the activities. This was a reference to the joining in the activities, and, of course, the activities were and are escalating in cost. There is now a proposal for further development which is very costly but might in some respects be more encouraging.

Mr. Sandys: Is it not perfectly clear that the Government had firmly decided to pull out of E.L.D.O. and that it was only the outcry here and abroad which made them change their mind?

The Prime Minister: No, Sir; it is not so perfectly clear because it is not a fact. As I have said, there is a difference between continuing in the organisation and continuing very expensive activities. We made it plain—and had done so long before the weekend to which the Question relates—that we could not go along with the very heavy escalating costs and with the costs falling on Britain as a result of the excessive share of those costs which right hon. Members opposite negotiated and committed us to.

Sir G. Nabarro: But would not the right hon. Gentleman remove a great deal


of dubiety about this matter by publishing what has been the United Kingdom contribution to costs since the onset of the scheme and what is the proposed contribution in sterling this year and in future years?

The Prime Minister: I will consider that. The cost so far has not gone very much beyond the original estimate. What we are concerned with was the fact that even on the original E.L.D.O. project the cost has much more than doubled and, since there is a widespread feeling that this should be extended by the adoption of the Perigee Apogee System, which would add far more, we were concerned about the ultimate burden on the taxpayer.

Mr. Heath: Is the Prime Minister aware that the Government's original position was not the contrast between continuing to take part in the activities and remaining a member of the organisation, but that in the aide me moire itself of 3rd June sent to other Governments it was said:
… the latest proposals do not constitute a sufficient basis for continuing United Kingdom participation in E.L.D.O."—
not "in the activities"? The Foreign Secretary himself at London Airport on 5th June said:
We feel it is not in the best interests that we remain a member of the organisation"—
not of the activities. Therefore, it is not a question of discriminating between these two. On the Foreign Secretary's own statement, it was a withdrawal from the organisation.

The Prime Minister: As I have said, there is a difference between participating in an organisation and remaining a passive member, and this was the point at issue. I was extremely surprised that the right hon. Gentleman, who himself signed the E.L.D.O. agreement, should want to raise these issues. As he knows—and this is the cause of all the difficulties—he and his colleagues made no attempt to protect the British taxpayer against these unlimited——

Mr. A. Royle: On a point of order. Is it in order for the Prime Minister yet again to produce a red herring in answer to a question?

Mr. Speaker: I do not like the raising of "points of order" at Question Time,

particularly when they are not points of order.

The Prime Minister: I was saying that the right hon. Gentleman and his colleagues not only failed to protect the taxpayer but resisted the attempts of other Governments to limit our commitment. Having been one of the negotiators, he will recall that the Dutch Government—[Interruption.]—I shall answer this question and hon. Members opposite may not like it—the right hon. Gentleman will recall that the Dutch Government proposed to stop at £70 million, but that is was the British representative who argued that there should be no limit but that each country should pay its percentage share of all expenditure over the unreal limit of £70 million.

Mr. Heath: I am not in the least surprised that the Prime Minister should try to evade the question put to him. Will he now answer the specific question? Why did the Foreign Secretary say at London Airport on 5th June that the United Kingdom was not to remain a member of the organisation?

The Prime Minister: I have said that my right hon. Friend was referring to continuing the activities of the organisation. All I say is that if the right hon. Gentleman had devoted his very considerable—[Interruption.]—expertise on hair-splitting of these words—[Interruption.]—

Mr. Speaker: We listened to the question and I want to hear the answer.

The Prime Minister: I only wish that the hair-splitting abilities of the right hon. Gentleman, which he is trying to show on these statements, had been devoted at the time when he negotiated to protecting the taxpayer and not deliberately saddling us with these extreme costs.

Mr. Speaker: Mr. Anderson. Question No. 3.

Mr. Barber: On a point of order. Would it be in order for the Prime Minister to answer my right hon. Friend's question?

WELSH OFFICE (RESPONSIBILITIES)

Q3. Mr. Anderson: asked the Prime Minister what additional administrative responsibilities it is proposed to transfer


to the Welsh Office in order to bring the Office progressively into parity with the Scottish Office.

Mr. William Edwards: asked the Prime Minister when he proposes to transfer additional departmental responsibilities to the Welsh Office in accordance with the proposals of the second memorandum of the Council for Wales.

The Prime Minister: This matter is kept under continuous review but I have no new proposals to make at present.

Mr. Anderson: Does my right hon. Friend agree that there exist several anomalies in the present administrative structure in Wales, including division of responsibility between the Secretary of State and the Ministry of Public Building and Works, and does not he also agree that there should be consideration of the strong case for further devolution, especially in education, health and agriculture?

The Prime Minister: These are questions which should be worked out as we go along, because the establishment of the Welsh Department with a Secretary of State for Wales is something entirely new. As I said in my original Answer, we do not follow in every case the Scottish model. Our test throughout is what is best for Wales, and it does not necessarily follow that a greater degree of devolution is in every case best for Wales.

Mr. Stodart: Is the Prime Minister aware that since October, 1964, his right hon. Friend the Secretary of State for Scotland has found it necessary to recruit 550 extra staff at the Scottish Office? Will he protect the Principality from that particular parity?

The Prime Minister: I would have thought that the achievements of my right hon. Friend in respect of unemployment in Scotland, the lowest for ten years, housing in Scotland and also what has been done in respect of the Highlands and Islands fully justified the recruitment of the staff.

HOUSE OF COMMONS (REGIONAL COMMITTEES)

Q5. Dr. David Owen: asked the Prime Minister if, before completing his discussions on extensions of the committee

system of this House, he will move for the appointment, for a trial period, of all-party regional committees of this House, with powers to examine witnesses from the regional economic planning councils and boards.

The Prime Minister: This was one of the ideas I put forward in my speech in the debate on the Address, but I think we had better await the outcome of the discussions before taking action of the kind suggested by my hon. Friend.

Mr. Owen: Is the Prime Minister aware that there is considerable all-party support for such committees, that regional planning is at a very critical stage and that the councils are just about to report and that there is a feeling on both sides of the House that there is a considerable two-way traffic of ideas which would enhance regional planning?

The Prime Minister: Yes, Sir. My hon. Friend will realise that one of the difficulties is that in different regions and areas there is not exactly parity with the differences between the various parties in the House. In the region which my hon. Friend represents there is a very big Conservative majority, while in others there is a preponderant Labour majority. That is one of the difficulties which would have to be overcome.

Mr. David Steel: Will the Prime Minister recognise that we are not obsessed by the difficulties of party balance—[Laughter.]—and that there is all-party support for this method? Will he recognise that those concerned with this problem, of whatever party, who have campaigned for realistic regional development are now finding themselves bypassed by the planning councils and boards affecting their constituencies?

The Prime Minister: I can quite understand the hon. Gentleman's lack of interest in the party balance in some of these areas. I would not consider that hon. Members who have been campaigning for more regional activities have been bypassed. The actions of both the regional boards and the regional councils are of an executive and advisory character and jobs which have not been done before are now being done. But that does not cut across the responsibilities of Members of Parliament.

WESTERN EUROPEAN UNION (RESOLUTION)

Q6. Mr. St. John-Stevas: asked the Prime Minister if he will make a statement on the policy of Her Majesty's Government on the resolution passed at the Western European Union meeting in Paris on 15th June to set up a permanent European organisation for the development of space vehicle launchers, to be integrated eventually into a single European community.

The Prime Minister: I would refer the hon. Gentleman to the Answer given on 27th June by my hon. Friend the Minister of State for Foreign Affairs to a Question by the noble Member for Hertford (Lord Balniel).

Mr. St. John-Stevas: Surely the Prime Minister will see that that Answer, as well as his evasive reply earlier today, taken with the unanimous negative vote of the Labour Party Parliamentary delegation in Paris, must give the impression that he is neither serious nor sincere in expressing a desire to join the Common Market.

The Prime Minister: We have explained about joining the Common Market on many occasions. On this issue, I should refer to the resolution passed by the Western European Union meeting in relation to the space launcher and the very difficult question, affecting others besides ourselves, of its integration into other communities. My right hon. Friend was right in an Answer on 13th June to say that this was a matter for the Council, which needs time to consider it. We cannot take unilateral action, for this is a matter for the Council.

Mr. Molloy: Will the Prime Minister give the House and the country an assurance that he will continue to examine some of the ridiculous and rash agreements made by the Conservative Party when, unfortunately, it held office and will he also give an assurance that he will give the regional problems of Britain, which have been so long neglected, priority over some European agreements which have been made?

The Prime Minister: I could find better ways of spending my time than examining some of these rash agreements, but,

unfortunately, I have to examine them. That is why I have had to inform the House this afternoon that right hon. Gentleman opposite committed us to expenditure and resisted attempts to limit our commitments.

Mr. Hogg: Having regard to the enormous importance to modern industrial society of the technologies associated with space and to the need for continuity for modern industrial societies, having regard to the long time which these policies require for development, will not the right hon. Gentleman announce policies which may have to proceed beyond a single Parliament and which might command the support of more than one party?

The Prime Minister: Yes, Sir. Of course we all agree about the very great importance of space research in its various forms, but we have to have some regard to the cost, because if we were to enter into commitments going beyond the lifetime of one Parliament, as right hon. Gentlemen opposite did with such frivolity, that would mean that we had less resources for other and possibly more important forms of technological research.

PRODUCTIVITY (AWARDS TO EMPLOYEES)

Q7. Mrs. Renée Short: asked the Prime Minister if he will take steps to enable the making of awards to employees who make a special contribution either to the export drive or to increased productivity.

The Prime Minister: Contributions of this kind are recognised in the Honours Lists; and in addition The Queen's Award to Industry is given for collective achievement in exports or technology.

Mrs. Short: Would my right hon. Friend look at this again and consider whether we could not make use of the enormous amount of talent and ability that exists on the shop floor, so that those who bring forward ideas to increase productivity, which is vital now for the nation, shall get some sort of reward—not necessarily financial—"Hero of British Labour" or something like that?

The Prime Minister: I am not certain that my hon. Friend is fully up to date in the particular attitude to Stakhanovism


in certain parts of the world. Anyone who contributes to productivity has an equal chance of being considered with anyone else in the matter of a recommendation for an honour. The Queen's Award to Industry, which is a collective award in respect of productivity as well as exports, enables a fairly, widespread use of what has been done. For example, individual employees are entitled to wear lapel badges displaying the emblems of the award. Many of these efforts are collective rather than individual.

Mr. Maudling: Does the Prime Minister think that these sort of things will compensate those who produce invisible exports for the effects of the Selective Employment Tax?

The Prime Minister: I should have thought that the House had probably devoted enough time to debating the Selective Employment Tax without my wanting to add, or even being able to add, to the collective wisdom of the House on this very excellent Tax.

Mr. Moonman: Would not my right hon. Friend recognise that, although he suggested the Honours List as a possible area for recognition, in fact that is unrealistic for the large number of workers who make a contribution to the export drive or to productivity?

The Prime Minister: I think that my hon. Friend is wrong about that. He will be very surprised at the very large numbers of workers on the shop floor who, because of their contribution to industry, are recognised in the Honours List year by year.

Sir Harmar Nicholls: Would the Prime Minister try to find some way of identifying those who discourage export production by, for instance, wildcat strikes and laziness at work?

The Prime Minister: I would not think that anyone who discourages export work, whether by unofficial strikes, by inefficient management, or by a failure to bring up to the top in a firm people who have the ability to contribute, would normally be considered for inclusion in an Honours List.

Mr. Shinwell: Will my right hon. Friend remind the Opposition of the reward they got at the last General Election?

Sir C. Osborne: Will the Prime Minister bear in mind that the average working man and woman regards a higher wage or salary as the best reward he could get? Will the Prime Minister bear in mind that, if he could reduce the taxation on what ordinary people earn, they would be more grateful than they would be for other honours?

The Prime Minister: I think that the question of reductions in taxation should be taken into account on some of the earlier questions in connection with the very heavy burdens we have unnecessarily inherited of expenditure commitments which are very difficult to renegotiate. It does not lie in the mouths of right hon. Members opposite to fight an election campaign on a promise of reduced taxation when each day we are discovering new commitments which they entered into on a completely frivolous basis.

BUSINESS OF THE HOUSE

Mr. Heath: May I ask the Leader of the House whether he can state the business of the House for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. Herbert Bowden): Yes, Sir.
The business for next week will be as follows:
MONDAY, 4TH JULY—Finance Bill: Conclusion of the Committee stage.
TUESDAY, 5TH JULY—Supply (2nd Allotted Day): Committee.
There will be a debate on University Education and the recent White Paper on a Plan for Polytechnics and Other Colleges (Command No. 3006).
At seven o'clock, as the House is aware, the Chairman of Ways and Means has set down opposed Private Business.
Motion on the Weights and Measures (Exemption) (Beer and Cider) Order.
WEDNESDAY, 6TH JULY—Remaining stages of the Building Control Bill and of the Docks and Harbours Bill.
THURSDAY, 7TH JULY—Selective Employment Payments Bill.
FRIDAY, 8TH JULY—Private Members' Bills.
MONDAY, 11TH JULY—The proposed business will be: Remaining stages of the Industrial Development Bill.
Second Reading of the Criminal Appeal Bill [Lords].

Mr. Heath: Is the Leader of the House aware that the whole House will think it right that he should provide for an additional day on Monday for the Committee stage of the Finance Bill? In making his plans in advance, will be ensure that there is full and proper time for discussion of the Amendments to the Selective Employment Payments Bill?
Secondly, can the right hon. Gentleman tell us anything further about the two-day debate on foreign affairs, for which we have offered to provide one day? Has he yet decided whether this debate will take place before the Prime Minister goes to Washington?
Thirdly, can the Leader of the House tell us when the Prime Minister will enter into discussions with the Opposition on the question of setting up the inquiry which he mentioned at the end of his wind-up speech in the debate on the emergency powers on Tuesday night?
Finally, will the Leader of the House note that we have today tabled a Motion of censure on the Chairman of Ways and Means, arising out of an incident last night? No doubt the right hon. Gentleman will wish to provide time for a debate on this Motion at an early date.

Mr. Bowden: It is hoped that we shall complete the Committee stage of the Finance Bill on Monday without going unduly late. Adequate time, but I hope that nothing more than adequate time, will be provided for the Selective Employment Payments Bill.
As to the foreign affairs debate, the date of my right hon. Friend the Prime Minister's visit to America is not yet clear, but it is our intention to endeavour to arrange the debate before he goes to America. My right hon. Friend made it clear, as the right hon. Gentleman said, that we would consider setting up an inquiry. Consideration of it is proceeding.
Without commenting at this stage on the Opposition's wisdom in tabling a Motion of censure on the Chairman of Ways and Means, I give the assurance that we will do what is usual to provide time.

Mr. Grimond: Is the Leader of the House aware that there is a widespread feeling in many quarters of the House that we should have a debate on British policy in Vietnam next week? As we can continually sit through the night on financial matters, will the Leader of the House consider whether it is possible to at least suspend the rule, possibly next Tuesday, and find time during our normal sittings to debate a matter which is regarded widely as a matter of first-rate importance?

Mr. Bowden: No, I cannot promise anything in addition to the normal two day foreign affairs debate, unless there should be some bonus of time. At present, I do not see any additional time forthcoming this side of the Summer Recess.

Mr. Michael Foot: May I press my right hon. Friend on the question which has been put by the Leader of the Liberal Party? Will my right hon. Friend reconsider this question as a matter of urgency so that the House shall be able to debate as speedily as possible the developments which have taken place in Vietnam? Will my right hon. Friend bear in mind that nothing brings the House of Commons more into contempt than the fact that we are prevented by our procedures or by decisions of the Government from discussing a paramount question of international policy? Will my right hon. Friend take account of the fact that large numbers of Members think that it would be a disgrace if we do not have an urgent debate on this question before any more bombs are dropped?

Mr. Bowden: I have already said that I will endeavour to arrange the two-day debate for foreign affairs, which will include Vietnam, before my right hon. Friend the Prime Minister goes to Washington. This I intend to do.

Mr. Sharples: Can the Leader of the House say whether it is the intention of the Home Secretary to make a statement on the Government's policy relating to fugitive offenders between the time when the White Paper is published and when legislation is introduced, in view of certain cases which may well arise?

Mr. Bowden: I will consult my right hon. Friend about this. I have taken the


point. I think that there is some importance in the matter.

Mrs. Joyce Butler: May I press my right hon. Friend to reconsider the possibility of having a debate on Vietnam next week? Does he appreciate that very many people in the country, who have been sickened by the bombing of Haiphong and Hanoi, are completely unable to understand why it is that the House of Commons cannot debate this urgent subject and make a pronouncement on the situation? Will my right hon. Friend look at Ihis matter again?

Mr. Bowden: My right hon. Friend the Prime Minister made the position of the Government quite clear, on our policy on Vietnam, in the exchanges which took place in the House yesterday. I cannot promise a debate on Vietnam in addition to the two-day debate I have already promised.

Sir G. Nabarro: Would not the right hon. Gentleman agree that the feeling in all quarters of the House is that it is ludicrous to devote hours next Tuesday evening debating weights and measures and private business about the City of Liverpool, although important, which could be dealt with on a hundred other occasions? Why cannot we debate Vietnam between seven o'clock on Tuesday and the early hours of the morning, or for as long as hon. and right hon. Gentlemen opposite are prepared to sit, on this crucially important issue?

Mr. Bowden: During the hon. Gentleman's absence from the House he appears to have forgotten the procedure of the House, in that when the Chairman of Ways and Means intervenes with Private Business he has priority.

Mr. Orme: Does my right hon. Friend not recognise that the decision of the Government is incomprehensible to hon. Members and many people outside—the decision that we cannot debate the vitally important issue of Vietnam in a democracy when things are happening in the world that could lead us into a third world war? Is he aware that hon. Members on this side of the House are demanding that we have a debate next week on this issue?

Mr. Sandys: Is the Leader of the House resisting; this request because he is afraid

to show up the deep division within his own party?

Mr. Bowden: No, Sir. I am resisting it because the Government's position was made paramount and clear yesterday.

Mr. Paget: Would my right hon. Friend ask the Chairman of Ways and Means to be so kind as to exercise his right on some other day? Would my right hon. Friend also consider Motion No. 192—which is designed to provide Mr. Speaker with the power to grant an immediate debate on issues such as this, a power which you, Mr. Speaker, no doubt felt sorry you did not have yesterday?

Mr. Bowden: I am sorry that I have not got a copy of Motion No. 192 with me. My Order Paper goes up to Motion No. 107. However, on the question of the interference or intervention by the Chairman of Ways and Means, my hon. and learned Friend will recall that this is done, on this occasion, on a Supply day. It is an Opposition day which has been taken, and not a Government day. If, therefore, the Chairman of Ways and Means were to decide to take some other day, it would be for the Opposition to decide what to do with the debate on Tuesday.

Mr. Ian Gilmour: While we all know the views of the Prime Minister and the Government on this issue, will not the Government pay even some attention to the views of the House?

Mr. Bowden: We certainly do, in providing the norma] amount of time for debate.

Mr. John Hynd: I understand that the Leader of the Opposition referred to the fact that a Motion of censure has been tabled by the Opposition on the Chairman of Ways and Means. May I ask the Leader of the Opposition—[HON. MEMBERS: "No."]—or through you, Mr. Speaker, ask the Leader——

Mr. Speaker: Order. The hon. Gentleman must put questions only to the Leader of the House.

Mr. Hynd: May I ask the Leader of the House whether this issue, which has apparently been raised on a party basis, is to be a matter for the Whips since, in my understanding, the position of the


Chairman of Ways and Means has always been that he is representative of the House and not of a political party?

Mr. Bowden: It is common form when these things happen—and I am sure that the House will agree that they happen infrequently—that time should be provided as quickly as possible after such a Motion has been tabled. I have not yet seen the Motion, but that is nobody's fault; it is a question of printing and the difficulty which arises following hon. Members' having sat all night. The decision of how either side of the House should vote is a matter for each side of the House.

Mr. Webster: Since there were more than 120 Questions tabled yesterday to the Minister of Transport, and we dealt with less than one-third of them—apparently because the Leader of the House was himself answering Questions in another capacity—would the right hon. Gentleman try to arrange for special facilities to be provided so that hon. Members may ask more Questions of the Minister of Transport, particularly at this time when she has some very controversial policies to submit to the House?

Mr. Bowden: We are often in this difficulty because when hon. Members want more time to ask Questions of one Department, another Department must be sacrificed. We are not tied to a particular roster. This is usually discussed through the usual channels and I am prepared to do that. The difficulty is that if we give two days for Questions to one Department, another Department suffers.

Sir B. Janner: Has my right hon. Friend noted Motion No. 99 in respect of which 150 hon. Members, including myself, have added their names? In view of the very serious position which exists and the anxiety which is felt in the House and outside on this matter, of the treatment of a minority section in Russia, will my right hon. Friend provide time at an early date for a discussion of the Motion?

[That this House notes with concern the continuing difficulties confronting Jews in the Union of Soviet Socialist Republics, and calls upon Her Majesty's Government to use its good offices to secure for them the basic human rights afforded to other Soviet citizens.]

Mr. Bowden: I have seen Motion No. 99 and I am sure that all hon. Members have a great deal of interest and sympathy with it. My right hon. Friend the Secretary of State for Foreign Affairs will also, I am sure, have seen it, but, if he has not, I will see that it is brought to his attention. I doubt very much whether we would serve the interests of the people the Motion is designed to serve simply by debating the matter in the House. However, I am sure that the whole House is sympathetic with the Motion.

Mr. Hugh Fraser: When the Leader of the House comes to discuss the question of an inquiry between the two Front Benches, will he draw the attention of the Prime Minister to Motion No. 98—
[That this House requests the Prime Minister to arrange for the House to set up forthwith a tribunal under the Tribunals and Inquiries Act 1921 to investigate the allegations, which are as serious as those made before the Bank Rate Tribunal, that a few individuals have brought pressure to bear on a select few on the Executive of the National Seamen's Union, who in turn have been able to dominate the majority of that Union.]—
which, I think, reflects the unease felt by many hon. Members on both sides about the use of Parliamentary privilege to attack certain groups outside the House? Will he assure us that Motion No. 98 will be seriously considered when this discussion is taking place?

Mr. Bowden: The Motion suggests that a tribunal should be set up under the Tribunals and Inquiries Act. This matter will be looked into in the normal way when we discuss the inquiry.

Mr. Zilliacus: Will not my right hon. Friend take note of the fact that in the view of both sides of the House a far-reaching and widespread foreign affairs debate on an undated future occasion is no answer to the situation presented by the aggravation of the war in Vietnam, and that it is precisely the nature of the Government's response to that situation that makes it more urgent than ever to have the Government's policy and the whole situation debated next week in this House? Will my right hon. Friend please take account of the feeling of the House in this matter?

Mr. Bowden: On Thursday of last week I was pressed for a foreign affairs debate to take place before my right hon. Friend goes to Washington. The position is that a foreign affairs debate will take place before my right hon. Friend goes to America to discuss Vietnam and other things.

Mr. Selwyn Lloyd: In view of the considerable interest in the possibility of a change of rules for debates under Standing Order No. 9, will the Leader of the House consider giving an instruction to the Select Committee on Procedure to deal with that as a matter of priority?

Mr. Bowden: Yes, Sir. I have a great deal of sympathy for this, because we find ourselves in the position where it is almost impossible to get a debate under Standing Order No. 9. On the oilier hand, the Select Committee on Procedure has particularly requested that it should receive no more instructions, because it wants to get on with the job. However, I think that this is an additional one which that Committee might have.

Mr. Sydney Silverman: On the question of a separate debate and possibly a vote in the House on the Government's policy in Vietnam, would my right hon. Friend bear in mind that although it is perfectly true, as he said, that the Government, have made their position clear, it is a so clear that the Government's policy in this matter does not command the full support of the Opposition, does not command the full support of the Liberal Party, does not command the full support of my right hon. Friend's own party, does not command the full support of the United States and does not command the full support of any other interested party?
Would it not be a good idea, in a democratic community like ours, governed by the House of Commons as we always claim it to be, that before my right hon. Friend goes to see the President of the United States to discuss this policy, he should make quite sure exactly what is the opinion of the House of Commons on that policy?

Mr. Bowden: As my hon. Friend has pointed out, there are so many divided views on the subject that the Government's view may, therefore, be right.
[HON. MEMBERS: "Oh."] This is a field in which it is particularly difficult to be right. But I cannot move from the position that I have already taken, that I cannot provide additional time for a debate on Vietnam.

Mr. Kirk: Reverting to the question of my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), in view of the widespread support for the Motion tabled by the hon. and learned Member for Northampton (Mr. Paget), would it not be possible to circumvent the Select Committee on Procedure and have a debate on his Motion; in other words, go back to square one?

Mr. Bowden: I am not sure that the House would regard it as rewarding simply to debate Standing Order No. 9.

Mr. Mendelson: With reference to my right hon. Friend's statement that the Prime Minister has made the Government's policy clear, on the immediate issue, has he seen the reports out of Washington this morning that there is a new wave of bombing of installations coming, with the aim of destroying the harbour at Haiphong altogether, which handles food and other necessary items for keeping life going among the civilian population? In the light of the circumstances, will the Leader of the House not grant a special debate on Monday next so that we can hear the Government's view on this further grave extension of the war in Vietnam?

Mr. Bowden: The answer is still, no.

Mr. Turton: Reverting to the right hon. Gentleman's reply to my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), he will be aware that he has remitted to the Select Committee on Procedure as a matter of urgency the times of sitting of the House and the machinery of voting. If he were to withdraw the second instruction to enable the Committee to report on Standing Order No. 9, it would possibly mean that the Report would come from the Select Committee about three months earlier. Is that not desirable?

Mr. Bowden: I am certainly prepared to consider that.

Mr. Shinwell: Could my right hon. Friend enlighten the House about the


position of the Chairman of the Committee of Ways and Means, in view of the proposed Motion of censure? Is it possible for the Chairman of the Committee to continue to operate while that Motion is pending?

Mr. Bowden: Yes, Sir. That is the usual practice.

Mr. Peyton: While congratulating the right hon. Gentleman on the modesty with which he claimed just now that the Government's policies and views might be right—which would be unusual—may I ask him whether he does not think that, disregarding whatever views anyone may hold on the subject, entrenched obstinacy on the part of the Government in frustrating the desire of the House of Commons to discuss something is always foolish?

Mr. Frank Allaun: Is the Leader of the House aware that many of us who represent dock areas do not believe that it is possible to destroy 80 per cent. of a port's installations without killing thousands of men, women and children? Surely it is a crime against humanity, and surely the House of Commons should discuss the matter immediately?

Mr. Bowden: I am very well aware of the seriousness of the position, but I do not think that we should exaggerate it. One ought not to assume that, because bombing takes place, thousands and thousands of people are to be killed thereby. That was not the position during the last war.

Dame Irene Ward: May I ask the right hon. Gentleman whether he can arrange, on Motion No. 103, for some action to be taken so that someone may not be detained in Holloway Gaol without an examination of the circumstances in which she has had her sentences increased twice?

[That in the opinion of this House the delay in amending the law in respect of the penalising of a prisoner for exercising his or her legal rights is causing unfair use of the present law against a prisoner in Holloway, whose name has been supplied to the Home Secretary, who has twice had increased sentences imposed but has now

won her case, and that action should be taken by the Home Secretary to ensure that a delay in introducing the new Criminal Appeal Bill should not be used to deal with prisoners under the law which it is intended to repeal.]

Mr. Bowden: The hon. Lady will have noted that I have announced for Monday of next week the Second Reading debate on the Criminal Appeal Bill. Therefore, there has been no delay in the Bill. It has been through all its stages in another place.
On her second point, it is not for the Home Secretary to instruct the judges.

Mr. Hugh Jenkins: Does my right hon. Friend accept that, while the House has heard the views of the Government on Vietnam, the Government have not had an opportunity of being fully acquainted with the views of the House? Will he not, in his capacity as a representative and as the Leader of the House and not as a member of the Government, recognise that there is widespread feeling, and will he not at least say that he will reconsider what he has said?

Mr. Bowden: No, Sir. My hon. Friend seems to have forgotten that, yesterday, my right hon. Friend the Prime Minister completely dissociated the Government from these bombing attacks.

Mr. Longden: May I add my very strong support to the plea, mostly from hon. Members opposite, that we should have a very early debate on Vietnam, if for no other reason than to tell our American allies at this critical moment of their, and, therefore, our fortunes, that the majority of the House of Commons does not agree with his hon. Friends below the Gangway?

Mr. Hector Hughes: Will the Leader of the House find time to deal with the problem mentioned in my Motion on the Order Paper, which arose during the debates on the Finance Bill, namely, the unnecessarily long and repetitive speeches which prevent the House from dealing with matters such as Vietnam and a great variety of other problems which the House wants to discuss?

[That this House is of opinion that much of the time now being used by unnecessary speeches on the Finance Bill


could be more wisely used by curtailing those speeches so as to provide House of Commons time to debate the great variety of other subjects of national, Commonwealth and international importance which many Members desire to debate before the Summer Recess, and calls upon the Leader of the House to take steps to revise the House of Commons timeable accordingly.]

Mr. Bowden: I do not dissent from my hon. and learned Friend's view that we could save a great deal of time by shorter speeches. What I am not sure about is how to do it.

Mr. Higgins: Referring to next Thursday's business, could the Leader of the House make clear why priority is given to the Docks and Harbours Bill, in view of the fact that the statements by his right hon. Friend and others are likely to frustrate his intentions, because of the threat of public ownership? Can he not make the intention of the Government clear on the matter?

Mr. Bowden: I think that we should deal with the Docks and Harbours Bill as it is, and that any further development of Government policy on docks and harbours should await further legislation, if and when it comes.

Mr. Raphael Tuck: While appreciating my right hon. Friend's concern about not exaggerating things, does he not realise that a third world war might bring ruin and that, if he does not give way on this subject, he might be accused of fiddling while Haiphong burns?

Sir C. Osborne: Would not the Leader of the House consider meeting the demands of his hon. Friends from below the Gangway—not that I sympathise with them? Would it not strengthen the Prime Minister's hand when he goes to America if the American public could see how much support that view has in the House? Since they have threatened a vote, ought he not to make it clear to our allies how much strength there is behind the demand? If it is overwhelming, they will take notice of it. If it is not, we can forget it. Will he not reconsider the position and let us have a showdown, to see what strength there is?

Mr. Bowden: The views of my right hon. Friend the Prime Minister and the

Government have been clearly stated to the American Government. In addition, we shall be debating the subject before my right hon. Friend goes to Washington.

Dr. John Dunwoody: May I ask my right hon. Friend whether he realises that, while many of us support the Government's policy as it was announced yesterday, nevertheless we feel that this is a grave situation which seems to be worsening daily, and that it is quite ludicrous that we as a House are not to be able to debate it at the earliest opportunity?

Mr. Bowden: I am perfectly aware of the feeling in the House. My sole position at the moment is that I cannot provide additional time other than the two days which will take place before my right hon. Friend goes to Washington.

Mr. David Steel: Will the Leader of the House recognise that the fact that there are different views on Vietnam is no good reason why a debate should be refused; in fact, it is a very good reason why a debate should be granted? Surely the right hon. Gentleman recognises that this has support from hon. Members who hold widely differing views.

Mr. Bowden: The hon. Gentleman seems to have forgotten that the debate will take place. It has been granted, but it will not take place before next week.

Dr. David Kerr: Does my right hon. Friend not agree that his rôle as Leader of the House, like yours, Mr. Speaker, is to be the servant of the House? In view of the demand which has been made this afternoon by hon. Members holding very different views on the Vietnam situation, would he not think it right and proper to assist the House to pursue the course suggested in an early-day Motion, which it is not possible to do at present, namely, to have an early debate, when demand from the House is clearly and unanimously expressed on both sides?

Mr. Bowden: I am aware of my duties as Leader of the House, one of which is to be the custodian of the business of the House.

Sir T. Brinton: Does not the right hon. Gentleman realise that it appears absurd to people outside the House that, as my hon. Friend the Member for Worthing (Mr. Higgins) pointed out, next week we are to debate the concluding stages of


the Docks and Harbours Bill, on which some of us have spent a considerable amount of time, and which, from our point of view, will be completely useless, as the docks are to be nationalised? Why not postpone, or perhaps cancel that business, and use the time for a debate on Vietnam?

Mr. Emrys Hughes: Is the Leader of the House aware that he is treating the House as though he were a military policeman and we were all in the guard room? Does he not realise that obstinacy is not Parliamentary common sense? Can he tell us whether, in the event of a foreign affairs debate, it will be on a Motion by the Government, and whether the Whips will be on, or whether we will have a free vote?

Mr. Bowden: It will be a two-day debate. As to how it should take place, we can discuss in the normal way through the usual channels.

Sir Harmar Nicholls: Is the right hon. Gentleman aware that while the world may be aware of the Government's view on this matter, in view of the demonstration of yesterday and today from hon. Members below the Gangway, the view of the House of Commons is not known? Surely it is in the best interests of everybody and everything that the collective view of the House of Commons should be made clear, and be made clear quickly? Not one voice in the House has been raised in support of the Leader of the House on this issue.

Mr. BrookS: Is my right hon. Friend aware that his continued stonewalling on this matter is causing great perplexity and astonishment not only in the House, but throughout the country? Is he not aware that the events of yesterday, when the Prime Minister publicly dissociated Her Majesty's Government from certain vitally important and dangerous actions by this country's principal ally, are an extraordinary and unprecedented event in the post-war history of this country, and demand an urgent debate in the House?

Mr. Bowden: As I have said on a number of occasions this afternoon, the matter is to be debated before my right hon. Friend the Prime Minister discusses

the position with the President of the United States.

Mr. Marten: As there are some Members who think that the Americans may be right in bombing the oil storage tanks, can the right hon. Gentleman say whether the two-day foreign affairs debate will be next week?

Mr. Bowden: No, Sir. I have announced the business for next week.

Mr. Marten: I meant the week after next.

Mr. Murray: In view of the demand in the House for a debate on Vietnam, is it possible for my right hon. Friend to consider having two morning sittings next week, on Monday and Tuesday, to discuss this subject?

Mr. Bowden: No, Sir. On a number of occasions I have pointed out that morning sittings need a special procedure. In addition, the Select Committee on Procedure is considering the hours of sitting of the House.

Mr. Robert Cooke: Is not the right hon. Gentleman aware that the Government's new policy makes a debate on the Docks and Harbours Bill completely unnecessary? Will he use that time to debate this vital matter of Vietnam?

Mr. Bowden: No, Sir. The Docks and Harbours Bill is necessary in fulfilment of Devlin. Any further developments can wait a little longer.

Mr. Lipton: Does not my right hon. Friend realise that the promise of a two day debate on foreign affairs, whenever that may take place, covering the whole range of foreign affairs, is no substitute for a debate on the specific problem of Vietnam, and, therefore, his offer of a two-day debate serves no useful purpose in connection with the urgency of the problems with which we are faced in Vietnam? Will he therefore reconsider the inflexible decision which he seems to have taken?

Mr. Bowden: No, Sir. I cannot possibly reconsider it. My hon. Friend will appreciate that the last two-day debate on foreign affairs was concerned almost exclusively with Vietnam.

Mr. Heffer: Is my right hon. Friend aware that many of us are reaching the


stage in the House when we cannot go on in this way? We are pleading with my right hon. Friend to let us have a debate so that the country may know the feelings of the House in this serious situation. I say to my right hon. Friend, for God's sake consider how serious this is, and let the House of Commons discuss this issue on Monday of next week.

Mr. Molloy: Will my right hon. Friend accept that many of us can understand some of the procedural difficulties in which he finds himself, but we are pressing for a debate on this issue not merely for the sake of a debate, not merely to hear one another, but so that the House of Commons may make a contribution to this exceedingly dangerous situation which might result, not in an escalation to war, but in us taking a step towards sanity and world peace? His continued refusal to have such a debate can only be taken as meaning that he is not interested in the establishment of world peace.

Mr. Goodhew: Is the right hon. Gentleman aware that his discomfort this afternoon is caused by the fact that far from what he said, the House is quite unclear as to what the Prime Minister means when he talks about his policy on Vietnam? It is impossible to suggest to the people of the country that one can support one's allies in one breath, and in the next breath tell them to fight with their hands tied behind their backs. Does not the right hon. Gentleman think that in the interests of the Government it would be wise to debate this matter?

Mr. Bowden: I should have thought that there would be no doubt about my right hon. Friend's speech yesterday, when he made quite clear the Government's view on the recent bombing in Vietnam.

Mr. Heath: I think that both the Leader of the House and I know from the past experience which we have had in the posts now held by the Patronage Secretary, and by my hon. Friend, that there comes a time when, however much one wants to keep to the business one has arranged, the House expresses its opinion as a House, and one has to take this into account. May I therefore suggest to the right hon. Gentleman that as so many hon. Members have been able to express their views we might

have a discussion about next week's business, through the usual channels, after these questions are finished?

Mr. Bowden: Of course, I am prepared to agree to that.

Mr. Ryan: Does my right hon. Friend agree that events in South-East Asia have moved more quickly than the procedural events in this House? When he meets the Leader of the Opposition will he consider the point made by my hon. Friend the Member for Gravesend (Mr. Murray) about morning sittings to enable us to debate Vietnam?

Mr. Frederic Harris: At the time of the Suez crisis, we had a special dispensation for Saturday meetings. What is the difficulty this time in arranging that at short notice?

Mr. Bowden: A procedural Motion is needed for a Saturday meeting. I think that we had better leave this at the moment for discussion through the usual channels to see what can be done, even if we have to borrow a Supply day.

Mr. Rankin: If there are procedural difficulties about morning sittings, and these cannot be overcome, will my right hon. Friend, at his meeting with the Leader of the Opposition, consider, if necessary, the possibility of an all-night sitting on Tuesday—after all, we have had all-night sittings on the Finance Bill—and, if necessary, after the debate, on the Liverpool issue we can then proceed to deal with Vietnam?

Mr. Dickens: May I draw my right hon. Friend's attention to the fact that we Members of the House represent the sovereign will of the British people? The people want a debate on Vietnam at the earliest possible opportunity. May I invite my right hon. Friend to arrange for this debate this coming weekend? May I draw my right hon. Friend's attention to the fact that no fewer than 100 Members have expressed themselves clearly and unequivocally on the Government's policy in this direction?

Mrs. Anne Kerr: Does the Leader of the House recognise where, in historical terms, he may be leading or misleading the House if he does not permit a debate in the very near future on this crucial question? Does he recognise the tremendous amount of feeling that exists in this


country, as well as in New Zealand and Australia, who are opposed to the leadership being given by the United States in this matter in South-East Asia? Will he not wake up to the seriousness of this subject and realise that the British people are on fire about this?

Mr. William Hamilton: Will my right hon. Friend say on what grounds he bases his argument that there is no time available, and that the time for the Summer Recess must be fixed? If that is the argument, will not he consider extending the period before which we go on holiday up to at least 12th August, so that we can have a debate which is of considerable importance to the country and to the House?

Mr. Bowden: I have not said that there is no time available. What I have said is that I cannot provide time next week. We must wait until the two-day foreign affairs debate.

Mr. Jennings: Is it not clear that a dangerous situation has arisen this afternoon, as a result of the exchanges that we have heard? Is it not apparent to the Leader of the House that the power of the Executive has become so great that it can obstinately and coldly ignore the almost unanimous wish of the House for an immediate debate on a public question?

Mr. Bowden: There is nothing new in this. The Government of the day

have always been in charge of the business of the House.

Mr. Winnick: Is my right hon. Friend aware that many of our constituents find it virtually impossible to understand how he can refrain from offering a debate on such a subject as the extension of American bombing in Vietnam? Does not he agree that his attitude in refusing a debate means, in many respects, that the House of Commons is becoming impotent?

Mr. Booth: In his discussions with the Leader of the Opposition will my right hon. Friend bear in mind that there is a considerable desire in the House to change our ways in order to meet the needs of our times? If a new situation which has arisen as a result of the bombing of North Vietnam needs a new procedure to enable us to deal with the situation, does not my right hon. Friend realise that there will be considerable sympathy in the House if such a proposition is put forward?

Mr. Bowden: I am not against procedural changes; I am very much in favour of them. Nevertheless, we had better wait to see what proposals come to us in this respect.

Mr. Fortescue: Is my right hon. Friend aware that to our knowledge there is no precedent for a small group of obstinate and arrogant men denying the will of the House of Commons?

Mr. Speaker: On which happy note we might proceed with the business.

Orders of the Day — FINANCE BILL

Further considered in Committee [Progress, 29th June].

[Sir ERIC FLETCHER in the Chair]

Clause 43.—(HARBOUR REORGANISATION SCHEMES: CORPORATION TAX AND STAMP DUTY.)

4.15 p.m.

The Financial Secretary to the Treasury (Mr. Niall MacDermot): I beg to move Amendment No. 307, in page 51, line 10, to leave out "paragraph (a)" and to insert "paragraphs (a) and (b)".
This is a drafting Amendment, which corrects a defect in subsection (2). I shall be happy to explain it if any hon. Member wishes me to do so.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Schedule 11 agreed to.

Clause 44.—(STAMPING OF CONTRACT NOTES ETC.)

Question proposed, That the Clause stand part of the Bill.

Mr. Peter Hordern: This is a simple but helpful Clause, introduced as a result of years of requests from the Stock Exchange to allow stockbrokers to use franking machines instead of putting stamps on contract notes. I hope that the Financial Secretary will appreciate that stockbrokers, always well to the fore in the white heat of the technological revolution, are installing computers. Will he empower the Commissioners, who will be dealing with this problem, to consult the Stock Exchange authorities to see if it is possible to use franking machines in conjunction with the computer systems which have already been installed?
Finally, will he take the point that for many years the Stock Exchange has been pressing for the franking of transfer forms as well as contract notes. I therefore make the further plea in respect of transfer forms, and would impress upon the Government the view that they should

allow the franking of these as well as of contract notes.

Mr. MacDermot: I am grateful to the hon. Member for his welcome for the Clause, which meets a request which has been made for some time by the Stock Exchange and which will render its handling of these matters more efficient.
The Inland Revenue authorities will be quite willing to consider any proposals put to them by the Stock Exchange. I do not know the type of matter he has in mind for the use of computer machines in conjunction with franking machines, so I am unable to give either a positive or negative response, other than to say that we shall be glad to consider such matters. Equally, as there is no Amendment on the question of transfers, I am not in a position to give any indication about them, but if the hon. Member cares to write to me I shall be glad to let him have the answer.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 45.—(STAMP DUTY ON LIFE POLICIES NOT EXCEEDING TWO YEARS.)

Mr. Terence L. Higgins: I beg to move Amendment No. 224, in page 53, line 25, to leave out "two" and insert "three".

The Chairman: With this Amendment we can consider Amendment No. 225, in page 53, line 27, leave out "two" and insert "three" and Amendment No. 228, in line 36, leave out "two" and insert "three".

Mr. Higgins: Yes, Sir Eric. I am sure that the Committee will be glad to consider the other related Amendments at the same time. I find myself rather in the position of Oliver Twist asking for more. This is an improvement on last night, when we never got anything in the way of concessions, and therefore could not ask for more.
The background to the Amendment is a debate which took place on 24th June last year, when a new Clause was proposed by my hon. Friend the Member for Richmond, Surrey (Mr. A. Royle). As a result of his persuasive argument on that occasion the Government had consultations with the insurance industry


and tabled the Clause which we are now considering. We, in turn, tabled the Amendment.
In essence this business is concerned with life insurance—not whole life insurance but insurance for a comparatively limited period. The point that my hon. Friend made last year was that the stamp duty charged on such life insurance policies of limited duration tended to put this country at a disadvantage in the export business. He suggested that a rate of 6d. should be imposed on such policies, rather than that we should continue the previous ad valorem system, which tended to impose a very heavy burden compared with the taxes levied by other countries.
This tax had to be passed on by those underwriting such business in this country, and our competitive position was correspondingly worsened. We are, therefore, very glad that the Clause has been tabled, as it will help companies of this sort to increase their business and earn more foreign exchange.
I understand that there is a tendency for group life assurances of this kind to be written on a three-year rather than a two-year basis at guaranteed rates, and that recently, this Clause not having previously been tabled and considered, a significant amount of this kind of business has been lost to this country. Apparently, the premiums involved are substantial.
The Government have made an exception in the case of policies running for two years, and the point of the Amendment is that while we appreciate that there would be grave difficulties in going as far as five years, because that would bring a policy of this sort more into the whole-life class, where different rules apply, there is a case for moving one year further forward. Whether the policy is written for a short or a long period, if one spreads the nominal duty over a longer period that proportionately reduces overhead costs and makes the position of the underwriting company of British origin proportionately stronger.
The spread of this business internationally is very considerable. One syndicate of Lloyd's does business with about 30 countries, and thus makes a contribution in furthering international

trade. A certain amount of trade is normally associated with this kind of insurance business, and much of the insurance of this kind is in connection with firms sending personnel abroad.
The main point is that such personnel are frequently sent abroad on a two-year contract, but that it is not unusual—indeed, it is quite frequent—for people going abroad on this basis to have their contracts extended to three years. It raises rather difficult problems if, in these circumstances, either the policy has to be rewritten altogether or, unless the Amendment is accepted, it will have to bear tax on an ad valorem basis. Unless one has flexibility, so that the policy can be reasonably extended from two to three years, some disadvantage may arise.
This is not an enormously important Amendment, but, as the Treasury is prepared to concede the case concerning two-year policies, this extension would be worth while. The cost to the Exchequer would not be significant, certainly in terms of the additional export earnings which would be likely to be obtained. I invite the Financial Secretary to give us his views on the Amendment, and I hope that he will look on it with favour for the reasons which I have given. Perhaps he would give us some indication of what the additional cost would be.

Mr. MacDermot: No question of high principle divides us here, nor do I rely on any question of costs. Any difference in costs as between two and three years would be negligible. Both sides of the Committee have the same object here, which is to try to strike the right period for a concession of this kind. As the hon. Member for Worthing (Mr. Higgins) said, the Committee is indebted to the hon. Member for Richmond, Surrey (Mr. A. Royle), who raised this matter last year, and who, supported by the hon. Member for Worcester (Mr. Peter Walker), made a forceful argument. My right hon. Friend the Chief Secretary undertook to look into the matter, as a result of which this proposal was brought forward.
It is a matter of providing a sufficiently long period to cover the general run of these short-term life policies, but not to extend it to such a period that it would open up the possibility of their being used on a renewal basis in such a way as to


trespass upon the sphere of ordinary life business. The short-term policies cannot be used as securities for a loan, which is what a person who takes a longer-term policy achieves, and this is something of a limitation on them. In spite of that, there is a danger here.
The way in which we have approached the matter is to try to ascertain the period that would cover the general run of these policies. The hon. Member for Worthing said that he understood that there was a tendency for group life cover to be given on a three-year basis. I am not aware of such a practice, but if the hon. Member lets me have evidence of it I shall be glad to reconsider the matter.
The hon. Member invited me to say what was the basis on which we chose the two-year period. It followed discussions between the Inland Revenue and those who write these policies. The Revenue was urged to go beyond the two-year period, on the argument that some of the jobs for which this kind of cover was needed, such as construction work abroad, sometimes run on for more than two years, even though they were not expected to do so when they were first undertaken.
Normally, these contracts would be expected to be completed within two years, and usually the policy would be for two years. Our view has been that in the unusual circumstances of the contract being extended there is no great difficulty about the underwriter issuing a fresh policy attracting only the 6d. duty. The objection which was put to us is that this results in unnecessary administrative expenses to underwriters and brokers. It is a matter of striking the right balance, and we feel, on the evidence adduced so far, that the number of policies to which that is likely to apply would be a very small proportion of the total business done by the underwriters and brokers concerned. Bearing in mind the need to contain this within a reasonable period, we feel that a two-year period meets the situation. That is still my view.
If the hon. Member cares to withdraw the Amendment and let us have any further evidence and information of the kind which he indicated, if there is some additional information which has not already been supplied to us, I should be glad to reconsider the matter.

Mr. Higgins: We are most grateful to the Financial Secretary for that sympathetic reply. I shall do what I can to provide the evidence, because I understand that the group life business is normally done on a three-year basis. There is a genuine difficulty if the policy needs to be extended. It is true that one could issue a completely new set of documents, but in export markets of this sort there is a grave danger that people are inclined to regard the convenience of the thing as well as the cost.
When one is going to employ staff overseas on a two-year contract, but one knows that the job may well take an extra year, the difference in premium may not be a very great consideration. But if one thinks that if the contract goes on for another year one will have to go through the whole business of bringing out new documents, stamping them and so on, I should have thought that this was a genuine problem. But in view of what the right hon. Gentleman has said, we shall look into the matter again and approach him. Perhaps if that is so we might table a suitable Amendment on Report.
I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part oj the Bill.

Clause 46.—(LICENCE NOT REQUIRED TO DEAL IN POSTAGE STAMPS.)

Question proposed, That the Clause stand part of the Bill.

4.30 p.m.

Mr. Paul Bryan: We on this side have no intention to divide on the Clause, and the Government will not be surprised at that. In principle, we agree with the Clause, because it carries further the policy of a Conservative Postmaster-General who, in 1960, liberalised the licence system for the sale of stamps, with the intention of increasing the number of outlets.
But even a good Clause is liable to harm someone, and the someone who is harmed here is an important and valuable member of the community, the sub-postmaster. The sub-postmaster is not an employee of the Postmaster-General, but the conditions of his trade depend


entirely on decisions made by the Postmaster-General. For this reason, I should have liked to see the Postmaster-General here to explain the Clause which, although not attracting a large audience in the House of Commons today, raises questions about which the words of Government spokesmen today will be studied very carefully by the National Federation of Sub-Postmasters, representing about 23,000 people.
Prior to 1960, traders could sell postage stamps only if they were licensed to do so by the Postmaster-General. Licensed vendors were required to enter into an undertaking, under a £100 bond, not to offer for sale any stamps other than those which they had purchased at the post office specified in the licence. Licences were not issued to persons whose premises were less than 150 yards from the nearest place where stamps could be purchased. The licensed vendor did not receive any reward for the sale of stamps, and he was not required to pay a fee for the grant of a licence.
Up to 1960, therefore, the sub-postmaster had a local monopoly—very local indeed. He received no reward for selling stamps. His stamps were, as it were, a loss-leader or, if not a loss-leader, they were a no profit-leader which brought people into his shop. In 1960, the then Postmaster-General decided to liberalise the issue of stamp licences, and, under the Post Office Act, 1961, a bond was no longer required. Also, the Act cancelled the requirement that a licence should not be given to anyone with premises within 150 yards of a place where stamps could already be purchased. At that time, indeed, head postmasters were instructed to take positive steps to encourage shopkeepers and others to take out licences.
Following this liberalised policy, as one would expect, there was an increase in the number of outlets. This had two effects on the members of the National Federation of Sub-Postmasters. First, they lost a considerable amount of trade. But what seems to worry them almost as much is the outbreak or, at least, the increase—one could almost call it an outbreak—in the number of thefts and crimes of violence which have occurred. Not only have their sales of stamps been reduced, because of their retail trade com-

petitors tend to purchase their stamps from a Crown office, but disreputable traders can purchase stolen stamps obtained by unlawful access to sub-post office premises. Thus, the emoluments of existing sub-postmasters have gone down—these material considerations are important—and, even more serious, there is the fear that a wider market for the purchase of stolen stamps has already encouraged an increase of robberies at sub-post offices. Robberies with violence have already become an everyday risk and occupational hazard for sub-postmasters. Within the last 13 months, there have been three deaths among sub-post office personnel following criminal assault. On average, at least two sub-postmasters every week are subject to attack or the threat of violence. All the figures I am now giving the Committeee come from the Federation. The Federation complains that the post office does not insure either sub-postmasters or their assistants against attack. While the police are helpful, the Post Office, they say, refuses to spend money in implementing recommendations made by the police. Therefore, because of the increase in crime, sub-postmasters have been compelled to spend a good deal of money in security precautions. Many sub-postmistresses at small offices retain the services of an assistant, mainly for purposes of protection.
I understand that an assurance has come from the Post Office recently, in an official document dated 22nd June, in which it is said that the Assistant Postmaster-General—we are glad to see the hon. Gentleman here now—is urgently looking into the question of the security of sub-post office personnel. I should be grateful if something could be said about that.
There are 23,000 sub-post offices but only 2,000 Crown offices staffed by Post Office personnel, so the proportion of work done by these sub-post offices is very large. I understand that they do a good deal more than half the total business going over the counter in post offices in general. So the Post Office has the services of these sub-postmasters at bargain rates. They do not do very well. The Assistant Postmaster-General knows of the difficulty we are having now in recruiting sub-postmasters. They handle more than half of all the transactions over the counter, as I have said, and


they are absolutely essential to the administration of the Welfare State. After going into the figures showing the amount of money they earn, one wonders why more do not resign. I think that the reason is that, in many cases, they have already put their life savings into the shops.
With these considerations in mind, remembering the valuable work which sub-postmasters do and how essential they are in the administration of the Welfare State, I look for comfort from the hon. and learned Gentleman for the benefit of this admirable and indispensable section of the community.

Mr. MacDermot: The hon. Member for Howden (Mr. Bryan) invited me to explain the Clause, but he has already done that, in essence, very clearly, at the same time as giving us an interesting historical background. As he says, it is common ground on both sides of the Committee to wish to increase the number of outlets for the sale of postage stamps to the public. The Clause abolishes the necessity for a licence to deal in postage stamps. This is being done purely for the convenience of the public. The present licensing system does not involve any payment of fee or the giving of a security by way of bond as was required before.
But the fact remains that the existence of a licence and the need to apply for it still appears to be some deterrent, and it is hoped that after its abolition more people, for example, those who sell picture postcards and greetings cards, will be ready to sell stamps as well, to the greater convenience of the public.
The hon. Gentleman referred to certain fears which have been expressed about the Clause by the sub-postmasters' association. I was sorry that he stated so emphatically that the Clause would harm sub-postmasters, because I hope and believe that it will do no such thing. However, I know that fears have existed and have been expressed that it may harm them, so I shall try to deal with those.
The first basis of protest was the fear that extending the market in this way might extend the market for stealing stamps also and increase the number of thefts from sub-offices. I am advised that there is no evidence at all that the

licensing system has acted in any way as a deterrent to theft or that its abolition would increase it. Of course, we know that all forms of larceny have been increasing, disconcertingly, in recent years
The hon. Gentleman referred to the impact which this has had on sub-postmasters. As he has rightly said, this is a matter which my right hon. Friend the Postmaster-General has in hand and talks are going on at the moment with the Federation on the matters to which he refers. Although it has not been voiced or put in the forefront, there may also be an underlying fear among some of the sub-postmasters that the effect of these bulk purchases by retailers who are prepared to sell the stamps may be that, in future, bulk purchases will be made more frequently at Crown offices, to the detriment of sub-postmasters.
It is true that, under the licensing system, it is a condition of the licence that the stamps must be bought from a specified post office, which generally is the nearest post office, which may and, in many cases, will, be the sub-post office. This will, of course, no longer apply if we abolish the licensing system. But, if we are to be realistic, we must face the fact that, despite that condition in the licence, there has been no way of ensuring that licensees purchase their stamps from the specified post office.
We would accept that the normal practice, for reasons both of convenience and of safety, would be for any retailer to purchase his stamps from his nearest office. We therefore see no reason why the abolition of licences should affect the sub-postmasters adversely or cause them to lose income. To the extent that, in any locality, there may be more sales in bulk from the sub-post office, they would stand to gain, because the sub-postmaster is paid on a value basis and not on a transaction basis.
My right hon. Friend feels that the views expressed are not well founded. In view of the greater convenience to the general public, I hope that they and hon. Members on both sides will welcome the introduction of the Clause.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 47.—(POWER TO INSPECT BOOKS OF AGENTS CONCERNED WITH FOREIGN DIVIDENDS ETC.)

Question proposed, That the Clause stand part of the Bill.

Mr. Higgins: Research facilities in the House are somewhat limited, but even the deepest research has failed to produce much of great interest or controversy with regard to Clause 47. This refers, of course, to foreign dividend agents. Having consulted a number of people on the subject, there is only one main point about which I am concerned.
A number of earlier Clauses considerably widened the discretion of the Commissioners of Inland Revenue and there is also a slight tendency in the final words of the Clause to give them rather a good deal of scope. It says that the Commissioners may issue certificates to certain dividend-collecting agents—I am sure that this is a good and workable arrangement—but adds that these may be revoked at any time by the Commissioners and may contain such terms and conditions as they think proper.
In what circumstances does the hon. and learned Gentleman envisage such certificates might be revoked? If he could give us some idea of the terms and conditions which the Commissioners may have in mind, we should be grateful.

4.45 p.m.

Mr. MacDermot: I am grateful to the hon. Member for Worthing (Mr. Higgins) for raising this matter, because, although it is somewhat technical, this is an important Clause and it is right that I should explain it more fully to the Committee. It may be of interest to some people outside as well.
The purpose of the Clause is to give the Inland Revenue the power to inspect the books and other documents of a certain class of agents who do business in connection with the payment of dividends and interest to overseas Governments and companies, or who are engaged on behalf of customers in the collection of foreign dividends or interest. These people are required to deduct United Kingdom tax from these payments and pay the tax to the Revenue. The people who do this are relatively few and most are of the highest repute and have

been doing this extremely efficiently for many years.
Unfortunately, a few years ago, there was a case involving one of the small concerns, which showed that, over about five years, the Revenue had been defrauded by the tax being deducted and not paid over. A substantial sum of revenue was lost and the two partners concerned were prosecuted and sentenced to seven years' imprisonment. This naturally gave rise to discussions about how to prevent such a thing happening again. It was because the office of the inspector of foreign dividends, a branch of the Inland Revenue, had no kind of effective control that this kind of fraud could be perpetrated.
When the office came to discuss this matter with the banking authorities—it is mostly banks which do this work—and also with the accepting houses committee and the Stock Exchange, it was pointed out that there were objections to unlimited access by the Revenue to these accounts, because it would constitute an apparent breach of the confidentiality of information about customers' affairs, which is, of course, an extremely important feature.
They were seriously apprehensive that overseas residents might withdraw their business. It is as a result of this that this exemption procedure was put forward by a working group containing representatives of the Revenue and other interested bodies. The proposal is, in effect, that the well-established, well-known and reputable firms will be granted an exemption and that new applicants, after a probationary period, will be granted an exemption as well. In this way, the foreign investor who seeks confidentiality can be given some assurance of it in that his agent is exempted from the audit.
I was asked in what circumstances the Revenue would envisage withdrawing the exemption. This would happen only if an agent's returns subsequently appeared to be unsatisfactory or gave rise to any suspicion of dishonest dealings. It would be only in those circumstances that the Revenue would withdraw the exemption so as to give it the powers to inquire into and investigate such information as it had which gave rise to the suspicions.
In the ordinary way, these are extremely well-established and well-known bodies, and we envisage that it would be very


rare that an exemption, once granted, would ever have to be withdrawn. We envisage that most of these people will be exempted and that it would be only those people about whose bona fides there was some doubt or new applicants to the field who would be subject to this kind of audit.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clauses 48 to 50 ordered to stand part of the Bill.

New Clause.—(RELIEFS FOR SHIPBUILDERS IN RESPECT OF CERTAIN DUTIES.)

(1) The provisions of this section shall have effect for the purpose of affording relief in respect of duties of customs and excise chargeable on hydrocarbon oils, vehicle excise duty (including such duty chargeable in Northern Ireland) and purchase tax incurred in connection with the construction and fitting out of certain vessels and other floating structures.

(2) If, on an application made in accordance with directions from time to time given by the Commissioners for the purposes of this section, it is shown to the satisfaction of the Commissioners that a vessel or other structure to which this section applies, having been constructed in the United Kingdom by the applicant pursuant to a contract (whenever made) under which it was to become the property of some other person, was delivered by him pursuant to that contract after the coming into force of this section, the applicant shall, subject to subsections (7) to (9) below, be entitled to receive from the Commissioners a payment of an amount determined in accordance with the two next following subsections.

(3) Subject to the next following subsection, the said amount shall be such percentage as the Treasury may by order prescribe of the price payable under the contract in question for the said vessel or structure and all fittings and other equipment supplied by the applicant therewith, or, if that price appears to the Commissioners to be greater than the open market value of the vessel or structure and its said fittings and equipment as determined in accordance with Part I of Schedule (Reliefs for shipbuilders) to this Act and the Commissioners so decide, the prescribed percentage of that value; and an order under this subsection may prescribe different percentages in relation to different descriptions of vessels or structures.

Any price which is expressed in a foreign currency shall be treated for the purposes of this subsection as equivalent to a sum calculated in such manner as the Commissioners may direct.

(4) The price or value referred to in the last foregoing subsection shall, in the circumstances specified in Part II of the said Schedule (Reliefs for shipbuilders), be treated for the purposes of

that subsection as reduced as mentioned in that Part.

(5) The vessels and other structures to which this section applies are as follows—

(a) any ship, within the meaning of the Merchant Shipping Acts 1894 to 1965, the gross tonnage of which, ascertained in accordance with those Acts, is not less than eighty tons; and
(b) any other vessel, or other structure capable of flating on the sea, which is of a description specified in that behalf by an order of the Treasury, and in respect of which any conditions so specified are satisfied:

Provided that the Treasury may by order exclude from the operation of this section any ship, or any ship of a specified description, in the case of which less than a specified percentage of the cost of its construction, calculated in accordance with the order, was attributable to the United Kingdom expenditure as defined in the order.

(6) References in this section to the construction of vessels and other structures do not include references to their reconstruction, refitting or repair.

(7) If, within one month of the coming into force of this section, any person shows to the satisfaction of the Commissioners—

(a) that a vessel or other structure has been, or is to be, delivered to him pursuant to a contract made before 23rd June 1966, and has been, or is to be, exported by him pursuant to another such contract, and
(b) that, by reason of its exportation pursuant to the last-mentioned contract, he is or may become entitled to payment of a rebate under section 7 of the Finance (No. 2) Act 1964 (export rebates),

no payment shall be made under this section in respect of the said vessel or structure unless that person either by notice in writing to the Commissioners waives any right to the rebate in question or fails for any reason to become entitled thereto.

(8) No person shall be entitled to a rebate under the said section 7 in respect of any vessel or other structure in respect of which a payment under this section is, or could if applied for have been, made to any other person; and a person who, but for this subsection, would be entitled as respects any vessel or other structure to both such a rebate and such a payment may receive either, as he elects, but not both.

(9) Where in the case of any vessel or structure the whole or any part of the price payable as mentioned in subsection (3) above is not received in accordance with the contract in question by the applicant for a payment under this section, the Commissioners if they think fit may require the applicant to repay the whole or any part of any payment made to him on the application or, as the case may be, may withhold from him the whole or any part of any payment which would otherwise fall to be so made.

(10) It shall be the duty of any person to or by whom a payment under this section has


been made or applied for to inform the Commissioners of any event which would entitle them to exercise the powers conferred by the last foregoing subsection, and any person who fails to comply with this subsection shall be liable to a penalty of one hundred pounds.

(11) The provisions of Part III of Schedule (Relief for shipbuilders) to this Act shall have effect for the purposes of this section.

(12) For the avoidance of doubt it is hereby declared that the allowances referred to in section 9 of the Finance Act 1961 do not include payments under this section.

(13) Payments by the Commissioners under this section shall be made out of the sums received by them on account of duties of customs and excise and purchase tax; and—

(a) notwithstanding anything in section 5 (4) of the Vehicles (Excise) Act 1962 (which requires duties levied under that Act to be paid into the Exchequer) or in any Order in Council under that section, the Treasury may give directions for the payment to the Commissioners, at such times and in such manner as the Treasury may determine, out of the duties levied under that Act of such sums as the Treasury think fit having regard to the extent to which payments under this section are designed to afford relief in respect of such duties;
(b) any sums so paid shall be treated for the purposes of section 11 of the Act of 1952 (disposal of duties of customs and excise) as money received by the Commissioners on account of duties of customs and excise.

(14) Any order under the foregoing provisions of this section may be varied or revoked by a subsequent order, and shall be made by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons.

(15) This section shall come into force on such day as may be appointed by the Treasury by an order under this subsection made by statutory instrument and laid before Parliament after being made, but shall, in its application to any vessel or other structure by virtue of an order under subsection (5) above, have effect as if it had not come into force until such later day, if any, as may be specified in that order.—[Mr. MacDermot.]

Brought up, and read the First time.

Mr. MacDermot: I beg to move, That the Clause be read a Second time.
This is a new Clause to empower the Treasury to authorise the Commissioners of Customs and Excise to pay to shipbuilders sums broadly equivalent to certain indirect taxes which enter into the cost of construction, fitting out and delivery of ships which are not repayable or not drawn back under existing provisions. This provision arises from the recommendations of the Geddes Committee. As hon. Members will remember, that Report proposed that if the ship-

building industry were prepared to make a fresh start on the lines that the Committee proposed, the Government, in turn, should take a number of measures to assist the industry to become more competitive in world markets.
My right hon. Friend the President of the Board of Trade, on behalf of the Government, welcomed the Report in general terms and discussions have been going on with the industry. Those discussions have been making good progress and the Government hope to be able before long to report results together with their decisions on the recommendations for Government action. Meanwhile, we have acted on the suggestion of the Geddes Committee, in view of the time factor, that we should legislate in this Finance Bill to take power to introduce this scheme assuming that agreement is reached; and it may be introduced as part of a package covering action by the industry as well as the Government.
I make clear that this Clause itself does not introduce this new form of rebate; it gives power to the Government to introduce it. The rebate that is proposed covers a similar field to the export rebate and the taxes for which relief is to be afforded are the Hydrocarbon Oil Duty, the Vehicle Excise Duty and Purchase Tax in respect of goods, mainly stationary, which are purchased for the shipbuilders' use other than taxes on goods bought on capital account, for example, business motor cars.
This relief and the export rebate will not, of course, both be payable in respect of the same vessel, but if a vessel is being sold abroad so that the shipbuilder could qualify for either, he will have an election. He can opt for which payment he wishes. Owing to slight differences in the scheme, one may be more to his advantage than the other.
The scope of the scheme is that it will cover all vessels in excess of 80 gross tons. This is normally the dividing line between boats and ships. It will, in effect, include normal merchant ships, tugs, warships, dumb barges and large pleasure yachts. This relief will be available regardless of the purchaser, be the purchaser the Government, a private individual or a foreign shipowner. The Clause provides that the Treasury should, in addition, have power to extend the relief


to prescribed floating structures. This, for example, would include power to provide for payments to be made for the oil and gas rigs which are now being constructed in British yards.
The Clause, as hon. Members will see, is somewhat lengthy and complex. This is due to the fact that the complexities of shipbuilding itself require a rather prolonged Clause. The contract for the building and supply of a ship is itself a complex document. In order that there should be certainty about the scope of the rebate, provision has to be made to specify the exact method by which the relief is to be computed and also to safeguard against inflated claims.
I shall not seek to go through the whole of these provisions, but I shall try, with the assistance of my right hon. Friend the Minister of State, Board of Trade, to answer any particular points which may be raised. Broadly speaking, two basic facts will have to be proved to the satisfaction of the Commissioners of Customs and Excise for the relief to be payable, first, that the vessel was a structure constructed in the United Kingdom by the applicant under contract with another person, and, secondly, that the delivery under the contract to that person took place after the date on which the relief scheme came into force.
The percentage of the relief, like that in the export rebate scheme, is one which will be prescribed by Order made by the Treasury. It will be a percentage of the price payable under the contract for the vessel and all fittings and equipment supplied with it by the applicant, subject to certain deductions mentioned in subsection (4) and cases where there is an unusual amount of fittings and equipment referred to in paragraph (2) of the Schedule.

Mr. Simon Wingfield Digby: I am sure that the Committee will be grateful to the hon. and learned Gentleman for his explanation of this Clause of 96 lines, with 105 lines added in the Schedule, which pay tribute rather to the ingenuity of the draftsmen than to the clarity of the law we are seeking to pass. I do not think that should deter us from saying that this is something to be welcomed. I think that I shall be roughly right in paraphrasing it as meaning that home orders will get the same tax concessions as foreign orders.
In the past, there has been some controversy as to the relative advantage to the country of home and foreign orders. Any controversy there was has been more or less settled for the time being by the Geddes Committee's Report, which has said quite clearly that the advantage is equal and that there is no reason for tax concessions against the home orders for the benefits received as they will go on either saving or earning foreign currency for a number of years, rather than the earning of foreign currency being ended in one quick transaction.
I welcome the Clause on the ground that it shows that the Government are setting about quickly to implement the recommendations of the Geddes Report, which has been so well received. At the same time, on this side of the Committee there was some anxiety to learn that the Prime Minister intends to shift responsibility for the shipbuilding and ship-repairing industry yet again from one Department to another. Soon it will have been under no fewer than four Departments in nine years, three Departments under a Labour Government. We hope that they have got the matter right on this occasion. The fear is that this might lead to some reappraisal of the Geddes Committee's Report and the holding up of the implementation of those recommendations so well received on both sides of the industry.
I therefore welcome the new Clause both on its merits, because I am quite sure that it is the right kind of encouragement to give to this very important industry which can do so much for the economic position of the country, and, secondly, because it shows the earnest of the Government's intention to press on with the implementation of the Geddes recommendations. I trust that this will not be halted when responsibility for this industry moves to the Ministry of Technology.

5.0 p.m.

Dr. Reginald Bennett: May I express a few words of welcome for this new Clause. As one who has spent much of his life in and among ships, I consider that this is a very admirable and reasonably swift response to the Geddes Report on the part of the Government. It is a good thing to see this first action being taken, and I am sure that the pleasure will be


widely felt. I am happy that, for once, I am in a position to congratulate the Government upon their action.
I am pleased to see that, as ships generally ply at sea and among different countries, no matter what country has actually bought the vessel, there is no longer to be any distinction between ships bought for home or overseas ownership. The Financial Secretary mentioned the lower limit of 80 gross tons, a limit which, I seem to remember, cropped up in the learned discussions which we had on a Bill upstairs about anchors and chain cables. Is it not relevant today that the larger, private yachts, which are intended to be covered by this Measure are very much smaller than they used to be, while still being highly seaworthy? Would it not be wise to consider lowering that limit to something like 30 gross registered tons?
As we are now developing large hovercraft, and as we have discovered from discussions upstairs, that a hovercraft is at present classified as a ship, will this rebate be applied to the manufacturers of hovercraft also? I hope that the Government will find it possible to issue the appropriate Orders before very long.

Mr. John Peyton: I should like to reinforce the question asked by my hon. Friend the Member for Gosport and Fareham (Dr. Bennett). Previously one would have thought that it was not necessary to do so, but in view of the fact that at an earlier stage in the Bill, we had a rather unsatisfactory reply from the Government on the subject of whether hovercraft should be entitled to the same fuel concessions as are given to coastal shipping, one is more than justified in raising this point and hammering it home. I very much hope that the Financial Secretary will be able to assure the Committee, without any shadow of a doubt, that this new Clause covers hovercraft which are in direct competition with shipping.
There can be no possible justification for discriminating against this new and highly promising development. I hope that, if the Financial Secretary cannot give a direct and favourable answer now, he will produce one on Report. While, generally I welcome this new Clause, I cannot help but regret that it has proved

impossible to put it in very simple terms. The Financial Secretary, using all that anticipation at which he must be getting pretty good, laid the blame fairly and squarely on the complexity of a shipbuilding contract. I am the last person to challenge that, but I feel that it is only fair to divide the blame between the complexity of a shipbuilding contract on the one hand and the source from which all of these things originate on the other.
Particularly after nights of going through this sort of a Bill, one feels that, where simplicity is available, the rule is that it should be avoided at all costs as a very major danger, and that, whatever else may be said of successive Treasury Benches, in collusion with the draftsmen, it will always be possible to say that they managed to avoid anything so banal and terrible as producing a Clause which could be readily understood. It must be part of the trade that it should be incomprehensible, and on those grounds one must congratulate those responsible for this new Clause for having been thoroughly consistent.
I, too, should like to express anxiety about the transfer of responsibility for the industry to the Ministry of Technology. I hope that the Government's good intentions will not be frustrated by this transfer. At the same time, I fear that this Department, born so recently, has had thrown upon it a mixture of responsibilities against which its inexperience is becoming so palpably obvious. I hope that the Government will be alerted to this danger, and will not have too much hesitation, in the event of the Department's experience proving insufficient, in going back on their tracks and even transferring the industry back to the Board of Trade.

Mr. Stanley R. McMaster: I am grateful to have the opportunity to say a few words and I am glad to see that the hon. and learned Gentleman the Financial Secretary is here. He had a long "trick", if I may use that term, last night—20 hours or more, and it is less than 12 hours since he was answering another Amendment of ours before this Committee.
I speak on behalf of a constituency containing the largest shipbuilding yard in the country, perhaps in Europe, and people there will be very pleased to see


this new Clause. We have been pressing for this new Clause for a great number of years from this side of the Committee and we welcome it particularly in view of the news of the lessening of tension with Japan, and the conversations taking place between the shipbuilders of Britain and Japan. Our shipyards have come through a very difficult period since the war, particularly in the last 10 years. I have seen my own yard, since I came into this House six or seven years ago, lose about half of its employees, dropping from 24,000 to 12,000. This is a very substantial reduction in employment in a depressed area and this Clause is bound to give heart to the people there.
It has been news within the past week that the boilermakers and shipwrights have got together and reduced their demarcation boundaries. This sign of implementation of the Geddes Report by the workers as well as management will lead to a more enlightened view of labour relations within the yards and to a reduction in the number of trade unions. Everyone including the Government must play his part in this so that the country can retain its position in Europe and the world as the leading shipbuilding country, and as a maritime nation. This is essential. For these reasons I should like to welcome this new Clause.

Mr. Higgins: Like my hon. Friends I too congratulate the Government and welcome this new Clause. Like them too, I share a particular concern for the shipping industry, having spent some seven years in it. I must admit that my early apprenticeship in studying the words on the bills of lading brought me to this particular new Clause with a sense of dé jà vu. There are one or two points which I should like to make. First of all, we welcome the fact that the Government are introducing a Measure which will put British owners on the same terms as foreign owners with regard to the tax rebate when buying ships from British yards.
We welcome this particularly because it has shown that the Government are proposing to make progress with the Geddes Report. Those of us who, earlier this afternoon, had been very worried by the fact that the implementation of the Devlin Report is likely to be frustrated by measures now being advocated with

regard to the public ownership of the docks, are nonetheless glad to see that the shipping industry will be helped in the way set out in this Clause.
I should refer back to the earlier parts of the Bill and, in particular, to Clause 8 concerning the "Restriction on export rebates for goods consigned to Convention area." The Minister will be aware that this country's shipyards are in keen competition with those in Scandinavia. Therefore, inasmuch as this new Clause is concerned effectively with export rebates, there should be some integration between the Clause as it stands and Clause 8 of the Bill. Perhaps the Minister would tell us something about the position concerning ships constructed in this country and then sold to Scandinavian owners and what the reactions of our E.F.T.A. partners have been to the proposal we are considering.
We should bear in mind the point about hovercraft which my hon. Friends have raised. There seems to be some inconsistency in the definition of what is a ship and what is a boat. The Minister, in spelling out the details of the Clause, said that the line which had been drawn in the Clause was the normal line. But I understand that in the Industrial Development Bill the tonnage limit is 100, and I gather that an Amendment to reduce this has not been accepted. Indeed, it was refused completely, I think. Therefore, if we are to have a multitude of Bills and Clauses, we should, if possible, arrive at a consistent definition. Otherwise, there will be grave confusion between one Government Department and another.
Would the Financial Secretary say whether hovercraft will be covered by the Clause? Clearly, this may have important implications in the way that it has important implications for shipping generally regarding the position of British owners of ships or hovercraft. It is very important that British owners should be placed on the same terms as foreign owners when buying from British yards. When I read paragraphs 533, 534 and 535 of the Geddes Report, I could not but help reflect on the trouble which I had had in a former occupation in getting businessmen to regard the terms on which they could purchase ships on a comparable basis. It was true that at one time British owners had a real and justifiable


preference for British yards. At the same time, it is important that they should not be at a disadvantage as compared with foreign owners. This should be extended not only to ships but to hovercraft.
I should be grateful if we could have an answer to the detailed points raised by my hon. Friends from their great experience of the industry and to the points which I have raised.

5.15 p.m.

Mr. MacDermot: I thank the Committee for the general welcome which it has given to the new Clause.
The hon. Member for Dorset, West (Mr. Wingfield Digby), whose interest in this subject is well known to hon. Members, asked whether, broadly, the proposition was correct that the effect of the Clause is that home orders will enjoy the same tax concessions as foreign orders. Broadly, it is, subject only to the sort of modifications which I indicated, for example, about an unusual quantity of fittings on a ship. Something which would qualify for the export rebate would not qualify for this relief on a home sale. Subject to a few exceptions like that, the broad proposition is correct.
The hon. Gentleman invited me to enlarge on the reasons for this relief from indirect taxation. As hon. Members interested in shipping know, the building of ships is not comparable with other manufactures. As the Geddes Report suggests, a ship is a product built to international specifications for sale to an international market to operate on international seaways, whether the order is placed by a home or an overseas buyer. The special character of this market is widely recognised. It will be equally widely realised that this relief cannot be regarded as a precedent for proposals for similar relief in other industries. It is a unique relief for an industry in a special and unique position.
For tax purposes, most other countries make no distinction between ships sold to domestic owners and ships sold to overseas owners. Therefore, I do not think that we are creating a precedent in the international field. This Measure will be fully accepted and understood internationally.
Like the hon. Member for Yeovil (Mr. Peyton), the hon. Gentleman asked for an

assurance that there would be no question of holding up the implementation of the Geddes Report consequent on the transfer of responsibility to the Ministry of Technology. I can certainly give that assurance. I indicated that the Government expect to make an announcement as a result of the talks which have been taking place on an agreed drive for implementation of this Report. We expect to be able to make that announcement before we rise for the Recess.
The hon. Member for Gosport and Fareham (Dr. Bennett) raised the question of the 80-ton dividing line between ships and boats. I have heard the hon. Gentleman speak on this subject before. I do not pretend to know all the arguments involved, but as long as that remains the general dividing line it is right that we should take it for this purpose as well. We do not want confusion caused by different dividing lines for different purposes. There is nothing necessarily sacrosanct about the figure. It can be reconsidered, perhaps, in a future Merchant Shipping Act.
Like the hon. Members for Yeovil, and Worthing (Mr. Higgins), the hon. Gentleman asked me to confirm that hovercraft are within the new Clause. The answer is "Yes", in the sense that when any order is made pursuant to the Clause there will be power to make it wide enough to include hovercraft. I am not now giving an indication, because no decision has been taken, as to whether, in the event of such an order being made, as we anticipate, hovercraft would be included.
The hon. Member for Yeovil commented, as I have done, on the complexity of the Clause. My reaction was the same as his when I first saw the draft of the Clause. I assure him that the Treasury Ministers would have been happy if it had been shorter and simpler. But we were satisfied, when we went into the matter, that the price of doing that would have been ambiguity, and that though complex Clauses like this are indigestible to the hon. Gentleman—and I sympathise with him—they help, when analysed, to avoid disputes later about the proper scope of the relief.
The hon. Member for Worthing also asked me whether we expected any difficulties in connection with the provisions in Clause 8 in relation to this relief. The


answer is that we do not, for the reasons I gave. Other countries, including the E.F.T.A, countries, have similar provisions in their tax law and we do not think, therefore, that they will raise any difficulties. We think that they will be content with the provision and that it will not give rise to any of the difficulties Clause 8 deals with.
I thank the hon. Member for Belfast, East (Mr. McMaster) for his kindly words both about myself and, more important, about the Clause. It is certainly encouraging to hear the report he makes about the improvement in the industry in his constituency, and we certainly hope that this provision will lay the basis for one of the steps in what we hope will be a new deal for the industry.

Mr. Peyton: Would the hon. and learned Gentleman be good enough to go a little further on the question of hovercraft? I understood him to say that, so far, the Government's intentions are pure and good and that they have not excluded hovercraft from the operation of the Clause. I hope that he may be able to say that it is their intention that hovercraft shall positively have the benefit of the Clause.

Mr. MacDermot: The Government's intentions are always pure and always good and Treasury Ministers are always pure and always good ard never go beyond that which they are authorised to do. What I am seeking to do is to justify the introduction of the Clause, which is an enabling Clause. I have also made it clear that it is drawn in wide enough terms to enable an order subsequently to include hovercraft. The hon. Gentleman invites me to do that which I said I could not do, which is to give any indication whether, in such an order, hovercraft would or would not be included.

Mr. Edward M. Taylor: I apologise to the Financial Secretary for not being here for his opening statement and I hope that I shall not cover points which he has already dealt with. There are, however, two points of detail on which I should appreciate his answer. Subsection (2) of the Clause refers to a vessel being sold from one person to another. In other words, it is on the same basis of getting the rebate as is

the transfer of ownership from the builder to the shipowner.
In the Clyde area, part of which I represent, we have several shipyards which, when there was a gap in orders, made financial arrangements whereby a yard would build a ship on its own speculation and operate it under a shipping company in which it had an interest. The vessel was on lease and remained the property of the yard. I am not sure whether such a vessel will qualify for the rebate. If there is no purchase of the vessel, if it is not becoming the property of some other person, does it still qualify for rebate? I think the intention of the Clause is that the rebate should be paid in such cases but it would be helpful to know for certain.
This problem does not arise at present but it did arise three or four years ago when there was shortage of work in certain intervals for two Clyde yards in particular. I very much welcome this Clause in so far as it makes clear that the Government accept that there should be no difference financially between orders for export and orders for the home market.
Another point of relevance is the difference in financial arrangements for supplying credit for the purchase of ships abroad and at home. The present arrangements for providing credit for export orders are extremely favourable, but the removal of the shipbuilding credit scheme removed the same valuation or equal preference for ships built here for home owners.
Even if not in the short term, do the Government accept as a principle that an equal position should apply to home orders for home shipowning firms as to ships built for foreign lines in our yards? It would be helpful to have an indication that the Government accept this principle. I appreciate that we could not properly expect an exact indication that this is what may happen immediately, because in our yards the problem is not one of orders but of costs.
There are many orders. Most yards have enough work to keep them going for two, three or four years in some cases. The problem is that many of these contracts were taken on at an un-remunerative price and that there has been substantial escalation of charges and


material costs since then. To that extent, the problem is one of cost. The Clause is doubly welcome because it goes some way to relieve the costs of vessels and this is a great help. I recognise that the hon. and learned Gentleman cannot say that the Government will do so at once, but it would be helpful if the Government introduced something on the lines of the shipbuilding credit scheme to provide financial arrangements that would be the same for both home owners and foreign owners.

Mr. MacDermot: I congratulate the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) on not getting pipped at the post. He will find the answer to his first question in my opening remarks. Quite specifically, the answer is, "No". The kind of circumstance he envisages would not qualify for the relief, because the essential conditions for the rebate to be payable are that the vessel must have been constructed in the United Kingdom under a contract with another person and delivered under that contract to that person if this takes place after the date when the relevant scheme comes into force.
The hon. Gentleman's second point was not really relevant to the Clause. He asked whether I could give any indication that the Government would extend the shipbuilding credit terms available to overseas owners to British owners as well. The Geddes Committee considered this argument and rejected it as far as shipbuilding considerations were concerned. Representations have been made. I had a meeting with the Chamber of Shipping and these proposals are under discussion by my right hon. Friend with the Chamber of Shipping.

Mr. Higgins: I apologise for delaying the Committee but I want to take up one point. I stated that the definition dividing ships and boats in this Clause referred to less than 80 tons, whereas, I understand, the Industrial Development Bill upstairs refers to 100 tons and Amendments to that Bill to reduce the figure have not been accepted. Surely, as both these Measures are concerned with tax reliefs and investment incentives, it is desirable that the figure should be the same in both cases.

Mr. MacDermot: I must have notice of that question and, of course, I cannot comment on the other Bill. So far as we are concerned I believe it to be the case that 80 gross tons is the normal dividing line. It is my recollection that it is the line we adopted in the export rebate scheme. But I do not think it profitable for us to go into that matter here and now.

Dame Irene Ward: I, too, apologise for not being here when the Financial Secretary opened this discussion. I am glad that the Clause is being put into the Bill. I have not quite grasped what the hon. and learned Gentleman meant when he said that matters were under discussion with the Chamber of Shipping. I presume that the Clause anticipates full discussion with the appropriate bodies covering shipbuilding and shipping. I think that the hon. and learned Gentleman has probably seen the Question that has been put on the Notice Paper by my hon. Friend the Member for Dorset, South (Mr. Evelyn King). Some difficulty arose because it appeared that there had not been consultations before responsibility for shipbuilding was transferred from the Board of Trade to the Ministry of Technology.
When proposals affecting great industries are put forward by the Government, whatever their complexion, I firmly believe that the industries concerned ought to be able to expect to be put into the picture before final decisions are taken. I did not quite follow, therefore, what the hon. and learned Gentleman meant when he said that these matters were under discussion with the Chamber of Shipping. Are those discussions now going on, and is the Chamber of Shipping getting its way? I suppose that the hon. and learned Gentleman could not tell us when we shall be able to debate the Geddes Report, although that would be very helpful when we are adding a provision like this to the Finance Bill.

5.30 p.m.

Mr. Patrick Jenkin: I apologise for intervening, although briefly, but I want to discuss this matter of the 80 tons' and 100 tons' limits for vessels. The Financial Secretary clearly said that 80 tons would be the boundary line. In Committee upstairs on the Industrial Development Bill we argued


against the 100-ton limit provided in that Bill. My recollection is that the right hon. Gentleman the Minister of State, Board of Trade, said that he would reconsider the matter. All I am asking now is that his colleague, the hon. Member the Minister of State to the Board of Trade, should draw the right hon. Gentleman's attention to what has just been said by the Financial Secretary, because, clearly, there are obvious advantages in drawing the same lines in both pieces of legislation.

Question put and agreed to.

Clause read a Second time and added to the Bill.

New Clause.—(EXEMPTION FROM TAX OF SOCIAL SECURITY BENEFIT.)

Benefit under any Act of the present Session establishing a Ministry of Social Security and providing for benefits eligibility for which is to be determined by a Supplementary Benefits Commission established by the Act, or under any Act of the Parliament of Northern Ireland providing for corresponding benefits, shall not be regarded as income for any income tax purposes.—[Mr. Diamond.]

Brought up, and read the First time.

The Chief Secretary to the Treasury (Mr. John Diamond): I beg to move, That the Clause be read a Second time.
This is a straightforward and simple Clause and has the distinction of meaning just what it says. Moreover, it will be observed that it says it in plain and intelligible English.
As hon. and right hon. Members will know, the reason for the Clause is the change in the system relating to National Insurance payments. Under the existing law, those payments are not treated as liable to Income Tax, because they are regarded as compassionate payments made subject to a needs test and not as income within the Income Tax sense of the word.
A new system is being brought in under the two Measures mentioned and the benefit payable will take the place of National Assistance and will be called supplementary pension when the recipient has reached pensionable age and supplementary allowances in other cases. Because of the provisions relating to those supplementary pensions and allowances, it might be thought, unless provision were made to the contrary, that because a person had a clear

statutory title to the benefit the benefit would be taxable.
The Clause makes it perfectly clear that it is not to be taxable, because, in effect, it is in the place of the present allowances which are not themselves taxable. Similarly, it will not be regarded as income of the person in receipt of it for the purpose of dependent relative allowance and other allowances which have regard to the income of the recipient.
I think that that is sufficiently clear. The matter is very straightforward, and everybody is very wide-eyed, bright and perceptive.

Question put and agreed to.

Clause read a Second time and added to the Bill.

New Clause.—(REBATE ON FUEL FOR MOBILE CONSTRUCTION MACHINERY.)

Section 7 (1) of the Finance Act 1959 (which disallows rebates on heavy oils used as fuel for vehicles whether or not such oils are used to propel the vehicle) shall not apply to fuel used by self-propelled items of constructional machinery at such times as the constructional machinery alone is operating and the vehicular or propulsive characteristics are effectively immobilised or removed; so that fuel used by the power unit on driving static machinery shall be subject to rebate.—[Dr. Bennett.]

Brought up, and read the First time.

Dr. Bennett: I beg to move, That the Clause be read a Second time.
The last sentence of the new Clause summarises the issue as clearly as could be. The words run:
so that fuel used by the power unit on driving static machinery shall be subject to rebate.
The new Clause refers to an anomaly, although it is an anomaly which has occasionally been denied. It is that contractors are forced to use road-taxed fuel for certain forms of machinery which are not in themselves propulsive.
In early times, this whole subject presented no problem, because in a vehicle of moving or mobile construction machinery, there would be one engine to drive the vehicle and another engine, carried on the vehicle, to operate the other machinery. The most common example is the turning of a hopper for liquid concrete.
Since the early days, design has developed in an obviously satisfactory


direction in so far as there has been a considerable economy, and nowadays one power unit can work both the propulsion of the machinery and the machinery itself when it is stationary. It is obviously a much more efficient proposition in every way. But, alas, this concept has offended against the neat dichotomy of the Treasury's thinking according to which one engine cannot be both propulsive and constructive.
Two years ago, my hon. Friend the Member for Ilford, North (Mr. Iremonger) moved a new Clause to the then Finance Bill on something like these lines, and I would like briefly to refresh the Committee's recollection. The Clause then moved involved the use of a gadget which had to be operated from outside the vehicle. This gadget would lock the brakes on and, at the same time, open a valve which would supply rebated fuel to the engine. Before the vehicle could hoist its anchor and move again, that process had to be reversed, again from outside the vehicle.
This gadget was a good idea which was welcomed at the time by the Customs and Excise, but it was rejected by the Treasury as tending to create hybrid vehicles and also in some way tending to encourage "fiddles" with rebated fuel. I cannot regard those objections as very substantial, but I do not propose to press that.
This Clause seeks to obtain an equitable solution for such versatile vehicles, still without retrogression, of duplicate power units. What I seek to establish in the Clause is that mobile units of construction machinery shall, in future, be so effectively immobilised when on site that, in the opinion of the Treasury, they are no longer vehicles at all, but static construction machines. As such, they may run on rebated fuel, whatever the form of power unit actuating them. This immobilisation may need to be extensive, amounting to the removal of the wheels of the vehicles, if necessary, and the mounting of the whole affair on jacks or spuds operated mechanically or hydraulically with, if necessary, the complete isolation of the power unit from the transmission which would be used as a vehicle.
Subject to the conditions which the Treasury might lay down about immobili-

sation, units of building machinery, when not mobile and when not even vehicles for the time being, should be permitted to run on rebated fuel, whatever the location of the engine actuating the machinery. I feel sure that it is not beyond the wit of man, still less of the Treasury civil servants, to be able to ingest this concept and materially to free the construction industry from an impost which is as expensive as it is absurd, being thoroughly incongruous in the setting of tidy administration.
If this anomaly is not removed, either or both of two things will happen. First, such dual purpose machines will be forced again to duplicate their engines, doubling costs and becoming a drain on our national resources. Alternatively, under the beneficent provisions of Clause 7, to which I addressed a few words of welcome earlier in our debates on the Bill, a way will have to be found of separating the machinery from the vehicle when on site, still duplicating the sources of energy, but, at the same time, saving on the cost of licensing the locomotive element. Both these are clumsy expedients, as unsatisfactory to the industry as to the revenue. The new Clause can obviate all these undesirable developments and reduce building costs.
The arguments in support of a similar Clause moved two years ago were worthily supported by hon. Members on both sides of the Committee, not least by the distinguished right hon. Member who now presides over the deliberations of the House of Commons as Speaker. I hope that the Government will accord to the new Clause the serious consideration it deserves and improve the Finance Bill with a small but worthy measure of reform.

Mr. R. Gresham Cooke: I support my hon. Friend the Member for Gosport and Fareham (Dr. Bennett), who moved the Clause with such skill and wit. It is perfectly obvious that technical machinery can be found for separating the two fuels and ensuring that the engine that works the construction machinery does not use the fuel which is used by the engine that makes the vehicle run on the road. Technically, this little problem can be solved.
Anybody who has been on a building site and who has watched these construction engines running, using fuel at a very


expensive rate and at a rate of tax of 3s. per gallon, must be alarmed to think that the fuel which is really intended for running on the road should be used for building work, thereby increasing the cost of construction. I hope that the Treasury will heed this argument, because this is the sort of small thing which can be clone to reduce costs and to help the building industry. I am sure that, now that we have such a modern-minded Government, they will be the very first to adopt this sort of plan.

5.45 p.m.

Mr. Peyton: I want to refer the Financial Secretary to the remarks of so discriminating an authority as the present Speaker who, when he was back bencher, expressed, with a brevity of speech which I am sure he would now even more strongly commend, the reasons for not imposing this injustice upon the industry concerned. I refer hon. Members to column 501 of the Committee stage of the Finance Bill on 10th June, 1964.
I am the first to appreciate the fact that one does not normally in common sense call the attention of Ministers to speeches made by their counterparts in a previous Administration and expect them to be impressed. On the other hand, I feel that things are different when dealing with Customs and Excise matters because, just as Isaac found it difficult to tell whether he was dealing with Jacob or with Esau, so ordinary Members of Parliament find it extremely difficult to distinguish between Financial Secretaries or Economic Secretaries or other Treasury Ministers when they know full well that the voice is that of the Customs and Excise, not always expressed in the most dulcet and attractive of tones. I speak as one who is by no means a convinced admirer of that great establishment.
I feel entitled to remind the Financial Secretary of something said by a former Economic Secretary on this subject in 1964, on the occasion to which I have referred:
It is a difficult and real problem to make sure that the later and more highly developed methods of building, or of mixing concrete, or anything else, are not penalised by the tax system.
This difficulty has been languishing in the bosom of the Commissioners of Customs and Excise for some time now,

and, patient though I am, I am beginning to think that this process might perhaps have borne fruit, though I realise that in hoping this I may be rashly optimistic.
The then Economic Secretary went on to say this:
It is clear that, as time goes on
Then comes an immortal phrase. I certainly do not wish to be in any way offensive to my hon. Friend the Member for Farnham (Mr. Maurice Macmillan), but it is a splendid phrase. It finds itself enshrined in Government statement after Government statement. He said:
It is clear that, as time goes on, matters of this sort will have to be constantly in our minds."—[OFFICIAL REPORT, 10th June, 1964; Vol. 696, c. 502.]
To those of us who are familiar with this kind of jargon, this is a very special brand of consideration. We all know full well what happens when a Minister says that he will bear something in mind. We know full well that it is going in one ear and will not be arrested in its process out of the other one. This consideration was to be something rather special, because my hon. Friend said that it would have to be "constantly", ever-present, in the minds of the Government. We know very well that the unfortunate victim for the time being, in the case I am quoting the then Economic Secretary, is only there to do the will of the Customs and Excise; so in saying this he is really saying, "This problem is constantly in the mind of the Customs and Excise".
I support my hon. Friend the Member for Gosport and Fareham (Dr. Bennett), who very modestly and briefly moved the Amendment. I hope, without a great deal of confidence, that the Financial Secretary will be able to produce on a golden platter the proof that all my worst suspicions are unfounded and unfair and that the Commissioners of Customs and Excise have, from their long travail, borne fruit and shown some result from the state of having had this problem constantly in their minds.

Mr. MacDermot: Perhaps Jacob II may be allowed to intervene and adduce the arguments which the hon. Member for Yeovil (Mr. Peyton) will no doubt think were written by the hand of Esau. As the hon. Member for Gosport and Fareham (Dr. Bennett) said, this is a


proposal which goes back some way and has some history behind it. It is the British Ready-Mixed Concrete Association with which we are particularly concerned, because an ingenious person has devised a mechanism which, it is claimed, is foolproof and would ensure that the rebated oil could be used only for a purpose which in itself would not attract the duty. This is what the case is based on.
Originally, this matter was raised in 1963 by Sir Peter Roberts, with the then Financial Secretary, with a negative result. It was then raised in the debates on the Finance Bill which have been quoted by the hon. Member for Yeovil, when the hon. Member for Ilford, North (Mr. Iremonger) raised the matter on a new Clause, and the then Economic Secretary put forward the arguments refuting it. I do not know whether it has since been constantly in his mind. I confess that it has not been constantly in my mind, although it was in my mind before I saw the new Clause because the matter was raised with me some time ago. I looked into it carefully, as did the former Economic Secretary, with sympathy.
A perfectly valid point was made by the hon. Member for Twickenham (Mr. Gresham Cooke) when he said that when one has technical progress of this kind it should be possible to adapt Customs law, if one reasonably can, to take into account the technical progress being made. I say at once that I approached the matter sympathetically, but that I had to reject it, as I must advise the Committee to do, basically for the same reasons given by the Economic Secretary in 1964.
To summarise the reasons that were given two years ago, they are, first, that the concession would destroy the clear-cut line of distinction which is drawn by the present arrangements. It would be extremely difficult to control against abuse and if we granted it we believe that we would be bound to grant concessions in respect of many other types of vehicle which would be at least as difficult to control.
I appreciate that these are not the sort of arguments which appeal to the Committee. I do not know whether they will become more attractive if I explain

them, but it is my duty to do that. The vehicles which are permitted at the moment to use rebated oil are vehicles which are entitled to do so at all times. Those vehicles are listed in Section 200 (6) of the Customs and Excise Act—such vehicles as mobile cranes and those which are not used on the public roads and which have no road-fund licences in force in respect of them. There is a clear-cut distinction based on the character of the vehicle.
If a vehicle is excepted, its fuel tank may contain rebated oil. And if it is not excepted, it is an absolute offence for rebated oil to be taken into the tank which supplies the propelling engine. It is a clear-cut matter which can easily be checked. There is one exception to this, on which arguments are sometimes based, which is that of the travelling fairground showman. But there are two special conditions which overcome the difficulty of controlling these vehicles. They are the conditions that the vehicle must be totally immobilised by the disconnection of the transmission shaft to the rear wheels and that the rebated oil would in no circumstances be put into the fuel tank, but be fed into the engine from a separate container not mounted on the vehicle. The Customs officer can see at a glance whether or not the regulations are being observed.
The practical difficulty about the ingenious fuel selector device which has been invented is that I think it must be accepted that what one ingenious engineer can devise another ingenious engineer can find a means of circumventing; that it would require expert appraisal of the machine to be satisfied that there was no evasion going on. And even if the machine was examined before the device was installed, there would be no protection and guarantee against subsequent tampering. A simple and ready check on the spot by Customs officers would not be a guarantee against evasion and they would not have the necessary special technical engineering knowledge and skill to see whether the device had been tampered with in any way to enable evasion to take place.
I do not think that anyone would argue that, for the purpose just of making an Amendment of this kind to the law, one could expect the Customs and Excise to go to all the expense and uneconomic use


of manpower to recruit especially skilled and expert staff for this purpose. But even if there were the expert staff available, there would still in many cases be the inherent difficulty in proving that any malfunctioning of the device was due to some deliberate act of the vehicle operator—some deliberate act such as broken pipes, jammed levers, snapped linkeages, and so on, which can always be claimed to be due to accident, or to badly fitted or badly maintained devices, which can be blamed on the maintenance mechanic.
Thus, from the enforcement point of view, even if enforcement proceedings were taken no more than a nominal penalty would be imposed.

Mr. Peyton: Before the hon. and learned Gentleman leaves that point, as he mentioned the possibility of metering the non-propulsion part of the vehicle, could there not be a device which would show clearly the amount of fuel which had been used for non-propulsion purposes—construction purposes, or something else—so that a rebate could then be paid alter the fuel had been used?

Mr. MacDermot: I imagine that there would be built into the system a metering device of that kind. However, these things can also be interfered and tampered with.
On the question of repercussions, the Amendment refers solely to vehicles in the constructional sphere, but if we were to accept this principle we do not feel that we would be able, in equity, to refuse making similar concessions to a host of other vehicles. Engines are used for other mechanical purposes, such as in garbage vehicles for pressing down the refuse, fire engines of one sort or another and ambulances for moving part of the vehicle when the vehicle is not moving on the roads, ice-cream vans and mobile refrigerators which have additional moving parts when the vehicles are in motion or stationary, and a host of other vehicles, including mobile workshops and Land Rovers, many of which are equipped with a power take-off for driving saws, winches and other equipment. These are some of the difficulties that would arise, and they are not theoretical difficulties.
Revenue evasion by misuse of rebated oil in road vehicles is already a serious problem and, with the serious differentia-

tion in the duty—3s. 3d. on the one hand and 2d. on the other—there is a big incentive to dishonest persons to seek to evade it. In view of these arguments, we are compelled to the conclusion that, even with this ingenious device, it would be putting the Revenue at too great a peril to accept the Amendment, and for that reason I must advise the Committee to reject it.

Mr. Peyton: It may be entirely my fault, because I did not express my ideas clearly, that the hon. and learned Gentleman did not understand what I was saying. However, I must say that I did not understand his reply, either.
I am suggesting that there should be a meter, which could be approved by the Customs, attached to all such vehicles and which would clearly show—and presumably such a meter could be made proof against "fiddling"—the amount of fuel that had been used for purposes other than propelling the vehicle along. I gathered from the hon. and learned Gentleman's reply that that point had not been considered. If it has not been, I think that the time has come when it should receive proper consideration.
Any reasonable person—and I include myself—would admit that there is a genuine difficulty here. For any Government to get into the position of hampering the use of modern devices and techniques of construction for tax reasons is the highest form of folly. I hope that the Government will do everything that they can to avoid being put into that very prejudicial and unwelcome position.
6.0 p.m.
I would ask the Financial Secretary, particularly, whether he would make absolutely clear whether the possibility of attaching meters to show the amount of fuel which has been used for non-propulsion purposes has been investigated. I cannot help feeling that that line is probably the most fruitful and hopeful that there is available.
I am sure that we are all very sympathetic to the Financial Secretary. He has had an extraordinarily long night and is getting towards the end of what to him must be an inconceivably long-drawn-out experience. I am sorry to have to inflict one more point upon him. He has been extremely courteous this afternoon and has not once given cause for


complaint, which makes me all the more reluctant to press him now.
I hope that, in turn, he will press the Commissioners to disturb their arrangements slightly and see whether something cannot be done, instead of putting Treasury Ministers in the embarrassing position of constantly having to say "No.". I appreciate that the Commissioners are in a world of their own. They say that it is impossible, untidy, and an inconvenience, and would make their arrangements unworkable. The Commissioners expect their word to be acceptable to generations of Treasury Ministers and, after them, the House of Commons. I do not think that it is. The Financial Secretary is in a very difficult position in that most of the time-honoured phrases have already been used. He has walked round them with some skill today. But the matter has been constantly in the minds of the Commissioners for a long time. They ought to explore accurately the possibilities of putting right an extremely unsatisfactory situation.

Mr. MacDermot: I can assure the hon. Member for Yeovil (Mr. Peyton) that replying to his arguments is like a habit-forming drug. Far from wilting under it, and feeling that I am coming to the end of my tether, I look forward to several hours more of debate with him. If he has any refinements to propose to this ingenious device, we and the Customs and Excise will be very glad to consider them.
However, I do not feel that any firm solution to the problem lies in the provision of a meter of the kind that the hon. Gentleman is suggesting. What we are considering is not the honest man. There is no problem with him. We are concerned with the dishonest person, who may not be the owner of the vehicle and who is seeking to make some money "on the side" by tampering with such a device.
If a meter is put up as an obstruction for him, I imagine that it will be no great difficulty for him to tamper with it so that it does not work and then to claim, in the way that I have indicated, that it was not his fault, he did not do it, but found it like that. One would not be able to pin responsibility in any way that would constitute an effective deterrent.
I do not think that we can profitably discuss these technical matters. I will gladly consider any further proposals which the hon. Gentleman may put forward.

Mr. Peyton: I do not wish to be tedious, but the point is not whether I, as an inexpert Member of Parliament, should produce means of doing this. It is for the Commissioners of Customs and Excise themselves to explore it. The Financial Secretary shakes his head, but that is the issue between us, and it is what I always find so very objectionable.

Mr. MacDermot: The Customs and Excise Board is not composed of skilled engineers. It is not for its members to devise mechanisms to help people to solve the problem. It is for those who are engineers to do that. However, we will consider any proposals put forward.

Mr. Peyton: I am sorry, but this is where we get down to the difference in attitude. The Customs and Excise Board sits there in a sort of sovereign splendour, independent and untouched by the real embarrassments which it causes to far too many people. I would never envy the Financial Secretary, because he is put there to defend that reactionary body, as a member of the Government devoted utterly to the cause of progress; yet here he is condemned to defend a position of utter reaction.
The Customs and Excise Board says that these mundane pedestrian affairs are nothing to do with it, and proposes to shrug off as being of no concern to it the embarrassments which it causes to others. I do not find that attitude of mind acceptable. I readily concede that its members are no more engineers than I am, but I cannot see that a body of that august nature, with all its powers and resources, cannot find an engineer whom they might consult.

Dr. Bennett: May I remind my hon. Friend that I mentioned in my original remarks that the Commissioners of Customs and Excise are on record as having approved this gadget. It is the Treasury, apparently, which does not approve of it.

Mr. Peyton: I am sorry. I missed that part of my hon. Friend's opening remarks. Perhaps the Financial Secretary can clear this up. It would be unreasonable for us to ask him to commit


himself, the Treasury or the Customs and Excise to finding a satisfactory device, whether or not one is presently available. I believe that the Commissioners and the Treasury, if they are responsible, might be encouraged to take a more constructive attitude and realise that the present effect of the tax which they are imposing is one of great embarrassment to other people—the users of these machines.
I hope that the Financial Secretary will be able at least to go so far as to say that between now and Report, the Commissioners of Customs and Excise and the Treasury, whichever is responsible, will stir themselves and find out whether there is any possibility of making use of a metering device. All the electricity and gas consumed in the country is measured by meters. We find these meters in every house in the land. It is not easy to "fiddle" them, otherwise it would be done far more regularly and successfully. Interference with a meter, which could remain the property of the Customs and Excise, could be visited with heavy penalties.
I cannot see why we should not stir the Commissioners out of their present lethargy and get them to investigate the possibilities of remedying what is a major inconvenience and a considerable injustice.

Mr. MacDermot: I wish to intervene again merely to say that I deprecate strongly the remarks which the hon. Gentleman has made about the Customs and Excise. It is not our tradition in the Committee to attack civil servants. As Ministers, we are responsible, and I would only invite the hon. Gentleman to discuss with my predecessors in office, and others who have held office in the Treasury, the terms that he has used in relation to the Board of Customs and Excise. I can assure him that they are very wide of the mark. I say no more about that.
With regard to the hon. Gentleman's invitation to me, I rest on what I have said. We have a different attitude about where the responsibility lies. I am open to be persuaded to the contrary, but I do not believe that the solution to this problem can be found by a mechanical device, for the reason which I have given.
We know that sometimes it is possible to deal with fuel with a marker device, but, by the nature of the thing, one cannot use a remedy of that kind here. This is the difficulty.

Mr. Patrick Jenkin: Until now our proceedings have gone along in a very happy atmosphere, but if I might continue my hon. Friend's biblical allusion, a cloud no bigger than a man's hand has appeared on the horizon.

Mr. MacDermot: It came from behind the hon. Gentleman.

Mr. Jenkin: The Financial Secretary says that it came from behind me. On the contrary, it came from that side of the Committee. The Financial Secretary's uncompromising reply to the reasonable case put forward by my hon. Friends is, I think, the first rift in the lute that we have had this afternoon.
I cannot believe that this is as difficult as the right hon. Gentleman is making out. Whether the hand that has appeared on the horizon is the hand of Esau, I do not know, but it appears that the right hon. Gentleman's brief is directed to the point of the mechanical device which was the centrepiece of the argument addressed to the Government two years ago by my hon. Friend the Member for Ilford, North (Mr. Iremonger).
As I read the Clause, it has been drawn specifically to avoid any reference to that device. In a sense the point has been taken that the Commissioners of Customs and Excise do not believe that it is practicable to operate a system of duality on the basis of the device which was the centrepiece of the argument two years ago. The Clause contains the words
and the vehicular or propulsive characteristics are effectively immobilised or removed.
Those words seem to make it clear that my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) is envisaging something different, and when he addressed the Committee he made it clear that the vehicle would have to be immobilised either by being jacked up or by being attached to the ground in such a way that the propulsive characteristics of the machine, the transmission linkage, was in some way completely by-passed, and there was no possibility of the main motive unit being used for propelling the vehicle. In those circumstances, it would


be used only for propelling the constructional machinery, and thus the rebated fuel would be used.
I believe that my hon. Friend's arguments are very strong and reasonable. After all, the case on which the Clause is based is not that the classification, to use the words of the Financial Secretary, would destroy the line of distinction which has hitherto been the guide-line on which the Customs and Excise operated. The line of distinction on which the Customs and Excise has operated has been rendered out of date. It is no longer relevant. Modern technical advance, which brings considerable advantages to those who use it, has come on the scene, and has to that extent rendered this line of distinction on which the Customs and Excise has been operating no longer of use.
One therefore has to go back to the principle of the distinction which has been drawn when rebated and non-rebated fuels should be used, which is broadly this, that where oil is used in a vehicle or transportation, for load-carrying purposes on the highway, then unrebated fuel must be used. In all other cases rebated fuel may be used, and this is the basis of the distinction for many of the pieces of constructional machinery which are used with rebated fuels.
6.15 p.m.
Instances have been given to the Committee this afternoon of such things as mobile cranes. In discussing this matter with the trade association concerned, I have been given examples of mobile generators, mobile compressors, and machinery of that sort which is regarded primarily as a constructional machine. The fact that it happens to get from place to place along the road is ignored, and the rebated fuel is used.
On that principle, it is clear that when a mobile concrete mixer is standing at a building site—and it may be there for some hours—and its drum is turning, this is a use which has nothing to do with transportation, and it is at that point that the line must be drawn, and it is to that point that the argument must be directed.
The strength of the case for it is tthe point that was put very clearly by my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) who referred to the in-

creased buildings costs which are involved in using fuel that is taxed at 3s. 3d. for driving labour-saving machinery, modern technological machinery that is used for building and for putting up all sorts of construction work, and so on. This increase in costs is something which one would have thought the Government would have wanted to stretch every nerve to avoid, particularly at a time when, inevitably, for reasons which it would be out of order to discuss, construction costs appear to be rising very rapidly indeed.
The Financial Secretary, so far from giving the impression of a man who is stretching every nerve to be helpful, gave the impression of a man who was stretching every nerve to try to find reasons why it could not be done, and this is what my hon. Friend the Member for Yeovil (Mr. Peyton) was complaining about when he made his critical remarks about the rejection of this idea.
We cannot lie supine under an attitude which is prepared to scratch around to find any argument why this obvious allowance should not be made.
The Financial Secretary gave us a long list of other vehicles in respect of which a similar situation might arise, and why, therefore, there would be strong pressure to give a comparable concession. None of the vehicles listed by the right hon. and learned Gentleman is in anything like the same category as the mobile concrete mixer which, so far as my researches go, is the only one which gives rise to a serious problem, the only one in respect of which the money involved in turning the machinery—the machinery being substantial and heavy—is significant in terms of extra tax.
One source which I contacted, and which attempted to put a figure on this, said that with a concrete mixer this could amount to about £300 a year. When one remembers that this sort of figure is equivalent to the whole maintenance costs of a reasonably new vehicle, that it is the sort of figure which is attributable to the whole of the rest of the fuel consumed in a year, one begins to realise the magnitude of the cost. If one said that it was between one-seventh and one-eighth of the total annual cost of operating the vehicle, one would not be wildly wrong. These things operate within wide variations because of the nature of the jobs on which the vehicles


are engaged, but the fact that there is something substantial in it, so far from being a reason for not doing something, is a reason for trying all the harder to do something about it.
The very unhelpful attitude of the Financial Secretary contrasts unfavourably with the attitude adopted by his predecessor—my hon. Friend the Member for Farnham (Mr. Maurice Macmillan), who replied to the debate on the previous occasion and went out of his way to say over and over again, "We would dearly like to be able to do this, and it is only because of technical difficulties that we cannot". I got the impression from the Financial Secretary that that was not his attitude. His attitude was that it could not be done for many reasons, which he gave to the Committee.
I cannot feel that this is the right approach to deal with a modern technological advance in an industry which has recently been abused up hill and down dale for not advancing sufficiently swiftly in technology and not making the maximum use of the new inventions and developments which are available. It has been accused of being behind the times, and of relying on old-fashioned methods. One has only to use one's eyes to see the extent to which this device has rapidly replaced the concrete-mixing machine on individual sites to realise what value it has to the building industry. To have a large, static concrete mixer on the outskirts of a town, with large supplies of the necessary aggregates, delivering ready-mixed concrete to sites all over the town, is an efficient way of operating.
That the Government, with their claims to improve the productivity and efficiency of this industry, should appear to be so reluctant to do anything to improve the situation, must be very disheartening to the industry. We must protest about this. Unless the Financial Secretary is prepared to be more forthcoming I must advise my hon. Friends to press the matter to a Division and to join my hon. Friend the Member for Gosport and Fareham in the Division Lobby in favour of the new Clause.

Mr. Gresham Cooke: I want to leave one thought in the mind of the Financial Secretary. No doubt he will be constantly thinking of this subject during

the coming year, ready for the debate which we shall have next year if the new Clause is not accepted. Alarmed by the idea put up by the Customs and Excise authorities that if he gives way on the question of the concrete-mixing machine he would have to give way on dust carts, fire engines, Land Rovers and the rest, he has refused to accede to our request. Surely it would be desirable to give way in respect of those machines. As a ratepayer I should like to know that the dust cart operating in Westminster was running on rebated fuel. Similarly, if my house was on fire I should like to know that the fire engine that came to put it out was operating on rebated fuel. A farmer using his Land Rover with a power take-off would be helped if he could use rebated fuel.
The fact that there are other applications should induce the Financial Secretary to say that during the next 12 months the Treasury and the Customs and Excise authorities ought to bring this concession into operation, in view of the productive benefit it would bring to the nation.

Mr. MacDermot: I am sorry if I gave the impression that I was any less anxious or willing to help to find a solution to this problem than was my predecessor the hon. Member for Farnham (Mr. Maurice Macmillan). When he was Economic Secretary. I have read the report of his speech in that debate and I am willing to adopt every word he said, including those at which criticism was directed, and to stand by them. The arguments which I have used are the same as he used. I elaborated them rather more fully than he did because, as two years have elapsed, I thought it right that we should explain more fully what the difficulties are.
It is the duty of the Committee to safeguard the Revenue, for the protection of the taxpayer. All that I would say is that the arguments put forward do not appear to provide adequate protection against abuse of the kind which we know exists and for which there is a strong incentive. The difficulty is that if abuse takes place it will take the form of driving the vehicle on the road with the rebated fuel. I want to know whether there is any way in which a Customs and Excise officer, with his ordinary common sense, intelligence and skill, would be able, on


a spot check of such a vehicle, effectively to determine whether an abuse had taken place and, if it had, whether that abuse was deliberate. Unless he could establish that he would not get the kind of determination by a court which operates as an effective sanction or deterrent against the kind of people who would want to abuse this concession. That is the essence of the problem.
If I have carried the Committee with me in the argument that this is a valid problem, and that this is the test which must be satisfied before we can make this concession within that framework, I shall gladly receive any representations made by any hon. Members, and look in detail into any proposals that may be made.

Dr. Bennett: I appreciated the sympathy and courtesy with which the Financial Secretary answered the debate. My appreciation, however, inevitably turned to a profound disappointment. I say that in sorrow and not in anger. What absolutely baffles me is this pathological preoccupation with smugglers. I know that preventive men are supposed to be against smugglers. We are all against sin, but the Treasury of today—if we do not make any reference to the King's Beam House—sees the smuggler under every truck.
The Financial Secretary has expressed himself in identical terms to the Chief Secretary in his preoccupation, a few nights ago, with the hovercraft, when he referred to it as the ideal smuggler's vehicle—the noisiest, draughtiest, windiest and wettest vehicle in any surroundings! The Financial Secretary, by his answer today, shows that the Government's view is unchanged. He has only added a certain amount of material. The Government's view is essentially unchanged. The issue that I have brought up today on the new Clause, however, is much broader than that which was raised two years ago.
In his answer the Financial Secretary did not say one word which was relevant to any new material, or to applications which have been made since the debate two years ago. There are new points which obviously present themselves, one of which I mentioned in my original exposition of the New Clause, namely, that immobilisation should be made com-

plete, if necessary, by the partial dismantling of the vehicle, as happens with a fairground vehicle, which I understand has the Treasury's approval. I am not talking about a gadget with which so much play was made in the brief so unfortunately compiled for the Financial Secretary.
6.30 p.m.
Secondly, there is talk in the new circumstances of a separate tank apart altogether from the vehicle. The Financial Secretary drew attention to the fact that spot checks could easily miss the question whether any fiddle was going on if there were a separate tank, as is used in some fairground vehicles. This would certainly make spot checks quite easy, but all this talk about fiddling seemed to me to be terribly misguided. It is not irrelevant but it is misguided. It is putting the fiddle before the bow. The fiddler will fiddle just the same, whether he has one, two or three tanks, or whether he has a Mini or a truck. He will put the stuff in the fuel tank if he wants to fiddle, and the fact that a gadget came up two years ago makes no difference to a fiddler's fortunes. He will fiddle just the same.
The Financial Secretary brought up the question of electrical and other vehicles. Fair enough. They are mostly electrical, mostly distinguished by having a very small part of their power output directed to the machinery which they carry. Therefore, I do not think that the load on them in having power takeoff for driving their internal machinery is serious. As far as I can make out on the Treasury's view, we always return to the war on the Land Rover with a power take-off. There is the fiddling farmer, perhaps whom the Treasury is hunting. The Land Rover with a power take-off, as we see it today, is not a vehicle that has been totally immobilised or partially dismantled. If the Treasury wants to be strict enough in the degree of immobilisation upon which it insists, surely we could find common ground in this matter.
In the light of the deplorable brief which the self-respecting Financial Secretary has been asked to plough through, I must ask my right hon. and hon. Friends to go into the Division Lobby against the Government.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 117, Noes 178.

Division No. 84.]
AYES
 [6.33 p.m.


Alison, Michael (Barkston Ash)
Griffiths, Will (Exchange)
Osborne, Sir Cyril (Louth)


Allason, James (Hemel Hempstead)
Grimond, Rt. Hn. J.
Page, Graham (Crosby)


Atkins, Humphrey (M't'n & M'd'n)
Gurden, Harold
Page, John (Harrow, W.)


Balniel, Lord
Hall, John (Wycombe)
Pardoe, John


Batsford, Brian
Hamilton, Michael (Salisbury)
Pearson, Sir Frank (Clitheroe)


Beamish, Col. Sir Tufton
Harris, Frederic (Croydon, N.W.)
Percival, Ian


Bell, Ronald
Harvey, Sir Arthur Vere
Pike, Miss Mervyn


Bennett, Dr. Reginald (Gos & Fhm)
Heath, Rt. Hn. Edward
Pink, R. Bonner


Biffen, John
Heseltine, Michael
Pym, Francis


Black, Sir Cyril
Higgins, Terence L.
Rossi, Hugh (Hornsey)


Body, Richard
Hirst, Geoffrey
Sharpies, Richard


Boyd-Carpenter, Rt. Hn. John
Hordern, Peter
Shaw, Michael (Sc'b'gh & Whitby)


Boyle, Rt. Hn. Sir Edward
Howell, David (Guildford)
Silverman, Sydney (Nelson)


Braine, Bernard
Hunt, John
Sinclair, Sir George


Brinton, Sir Tatton
Hutchison, Michael Clark
Smith, John


Brown, Sir Edward (Bath)
Irvine, Bryant Godman (Rye)
Stainton, Keith


Bruce-Gardyne, J.
Jenkin, Patrick (Woodford)
Steel, David (Roxburgh)


Buck, Antony (Colchester)
Jennings, J. C. (Burton)
Tapsell, Peter


Bullus, Sir Eric
Jones, Arthur (Northants, S.)
Taylor, Sir Charles (Eastbourne)


Burden, F. A.
Joseph, Rt. Hn. Sir Keith
Taylor, Edward M. (G'gow,Cathcart)


Chichester-Clark, R.
Kaberry, Sir Donald
Taylor, Frank (Moss Side)


Cooke, Robert
King, Evelyn (Dorset, S.)
Thatcher, Mrs. Margaret


Costain, A. P.
Kirk, Peter
Thorpe, Jeremy


Craddock, Sir Beresford (Spelthorne)
Knight, Mrs. Jill
Turton, Rt. Hn. R. H.


Crawley, Aidan
Lewis, Kenneth (Rutland)
Vaughan-Morgan, Rt. Hn. Sir John


Crouch, David
Lubbock, Eric
Vickers, Dame Joan


Dean, Paul (Somerset, N.)
McAdden, Sir Stephen
Wainwright, Richard (Colne Valley)


Deedes, Rt. Hn. W. F. (Ashford)
Mackenzie, Alasdair (Ross&Crom'ty)
Walker-Smith, Rt. Hn. Sir Derek


Elliot, Capt. Walter (Carshalton)
Macleod, Rt. Hn. Iain
Ward, Dame Irene


Errington, Sir Eric
Maddan, Martin
Webster, David


Eyre, Reginald
Marten, Neil
Wells, John (Maidstone)


Fisher, Nigel
Mathew, Robert
Whitelaw, William


Fletcher-Cooke, Charles
Mawby, Ray
Wills, Sir Gerald (Bridgwater)


Foster, Sir John
Maxwell-Hyslop, R. J.
Wilson, Geoffrey (Truro)


Gilmour, Ian (Norfolk, C.)
Maydon, Lt.-Cmdr. S. L. C.
Wylie, N. R.


Glover, Sir Douglas
More, Jasper
Younger, Hn, Georgo


Goodhart, Philip
Morgan, W. G. (Denbigh)



Goodhew, Victor
Nabarro, Sir Gerald
TFLLERS FOR THE AYES:


Grant, Anthony
Weave, Airey
Mr. R. W. Elliott and Mr. Blaker


Gresham Cooke, R.
Nott, John



Griffiths, Eldon (Bury St. Edmunds)






NOES


Abse, Leo
Doig, Peter
Howie, W.


Anderson, Donald
Donnelly, Desmond
Hughes, Rt. Hn. Cledwyn (Anglesey)


Archer, Peter
Driberg, Tom
Hughes, Emrys (Ayrshire, S.)


Ashley, Jack
Dunn, James A.
Hughes, Hector (Aberdeen, N.)


Atkins, Ronald (Preston, N.)
Dunwoody, Mrs. Gwyneth (Exeter)
Hughes, Roy (Newport)


Atkinson, Norman (Tottenham)
Dunwoody, Dr. John (F'th & C'b'e)
Hunter, Adam


Bacon, Rt. Hn. Alice
Edwards, Robert (Bilston)
Hynd, John


Barnes, Michael
Ellis, John
Irvine, A. J. (Edge Hill)


Benn, Rt. Hn. Anthony Wedgwood
English, Michael
Jackson, Peter M. (High Peak)


Binns, John
Ennals, David
Janner, Sir Bamett


Bishop, E. S.
Ensor, David
Jeger, George (Goole)


Blenkinsop, Arthur
Evans, Albert (Islington, S.W.)
Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)


Booth, Albert
Faulds, Andrew
Jenkins, Hugh (Putney)


Boston, Terence
Fitch, Alan (Wigan)
Johnson, Carol (Lewisham, S.)


Bowden, Rt. Hn. Herbert
Fletcher, Raymond (Ilkeston)
Jones, J. Idwal (Wrexham)


Braddock, Mrs. E. M.
Fletcher, Ted (Darlington)
Judd, Frank


Bray, Dr. Jeremy
Floud, Bernard
Kenyon, Clifford


Brooks, Edwin
Foley, Maurice
Kerr, Mrs. Anne (R'ter & Chatham)


Brown, Rt. Hn. George (Belper)
Fraser, John (Norwood)
Kerr, Dr. David (W'worth, Central)


Butler, Herbert (Hackney, C.)
Fraser, Rt. Hn. Tom (Hamilton)
Kerr, Russell (Feltham)


Butler, Mrs. Joyce (Wood Green)
Gardner, A. J.
Leadbitter, Ted


Cant, R. B.
Gray, Dr. Hugh (Yarmouth)
Lee, Rt. Hn. Frederick (Newton)


Carter-Jones, Lewis
Grey, Charles (Durham)
Lee, Rt. Hn. Jennie (Cannock)


Chapman, Donald
Griffiths, Rt. Hn. James (Llanelly)
Lipton, Marcus


Concannon, J. D.
Hamling, William
Luard, Evan


Cousins, Rt. Hn. Frank
Hannan, William
Mabon, Dr. J. Dickson


Cronin, John
Harper, Joseph
McBride, Neil


Crosland, Rt. Hn. Anthony
Harrison, Walter (Wakefield)
MacColl, James


Davidson, Arthur (Accrington)
Hazell, Bert
MacDermot, Niall


Davies, Dr. Ernest (Stretford)
Heffer, Eric S.
Macdonald, A. H.


Davies, Harold (Leek)
Herbison, Rt. Hn. Margaret
McGuire, Michael


Davies, Robert (Cambridge)
Hooley, Frank
McKay, Mrs. Margaret


Dewar, Donald
Horner, John
Mackenzie, Gregor (Rutherglen)


Diamond, Rt. Hn. John
Howarth, Robert (Bolton, E.)
Mackintosh, John P.


Dickens, James






Maclennan, Robert
Palmer, Arthur
Silkin, S. C. (Dulwich)


MacPherson, Malcolm
Pannell, Rt. Hn. Charles
Silverman, Julius (Aston)


Mahon, Peter (Preston, S.)
Park, Trevor
Silverman, Sydney (Nelson)


Mahon, Simon (Bootle)
Parker, John (Dagenham)
Slater, Joseph


Mallalieu, E. L. (Brigg)
Parkyn, Brian (Bedford)
Snow, Julian


Marquand, David
Pavitt, Laurence
Spriggs, Leslie


Mason, Roy
Pearson, Arthur (Pontypridd)
Swain, Thomas


Mellish, Robert
Pentland, Norman
Taverne, Dick


Mikardo, Ian
Perry, Ernest G. (Battersea, S.)
Thornton, Ernest


Millan, Bruce
Price, Thomas (Westhoughton)
Tinn, dames


Miller, Dr. M. S.
Price, William (Rugby)
Tomney, Frank


Mitchell, R. C. (S'th'pton, Test)
Redhead, Edward
Walden, Brian (All Saints)


Molloy, William
Richard, Ivor
Wallace, George


Moonman, Eric
Roberts, Goronwy (Caernarvon)
Watkins, David (Consett)


Morris, John (Aberavon)
Roberts, Gwilym (Bedfordshire, S.)
Wellbeloved, James


Moyle, Roland
Robinson, W. O. J. (Walth'stow, E.)
Whitaker, Ben


Neal, Harold
Rodgers, William (Stockton)
Willey, Rt. Hn. Frederick


Noel-Baker, Francis (Swindon)
Roebuck, Roy
Williams, Alan Lee (Hornchurch)


Ogden, Eric
Rogers, George
Williams, W. T. (Warrington)


Oram, Albert E.
Ross, Rt. Hn. William
Willis, George (Edinburgh, E.)


Orbach, Maurice
Rowlands, E. (Cardiff, N.)
Winnick, David


Orme, Stanley
Ryan, John
Zilliacus, K


Oswald, Thomas
Sheldon, Robert



Owen, Dr. David (Plymouth, S'tn)
Short, Rt.Hn.Edward (N'c'tle-u-Tyne)
TELLERS FOR THE NOES:


Page, Derek (King's Lynn)
Short, Mrs. Renée (W'hampton,N.E.)
Mr. Charles R. Morris and


Paget, R. T.
Silkin, John (Deptford)
Mr. R. W. Brown.

New Clause.—(TAX RELIEFS FOR EMPLOYED PERSONS.)

The expenditure of any person taxable under Schedule E, Income Tax Act 1952, in respect of the purchase of overalls, tools of trade and books up to a total value of £25 in any year wholly and exclusively incurred for the purposes of his trade, occupation or profession shall be allowed as a deduction from the salary or wages in computing the amount of assessment.—[Mr. Sheldon.]

Brought up, and read the First time.

Mr. Robert Sheldon: I beg to move, That the Clause be read a Second time.
The purpose of the Clause is to permit as allowable expenses against Schedule E the cost of overalls, tools of trade and books. A great part of the discussions we have on all Finance Bills is concerned with minor injustices which we come across from time to time. These invariably cover only a few cases, and they generally relate to people and companies of considerable means. It is right that we should concern ourselves with these few cases as and when they come up, because it is part of our function to put injustices right. But what we rarely do is consider the injustices which occur on a very much larger scale.
Many people with small means have the greatest disadvantage of all in being taxed under Schedule E. The Inland Revenue Annual Report for 1963–64 showed that there were over 20 million such people, earning just over £16,000 million, being the income chargeable under pay-as-you-earn, and this produced a revenue of £1,477 million. These people

form a very large proportion of this country's taxpayers. What is clearly demonstrable is the unfairness of the impact of our taxation system which bears so heavily on so large a proportion of the people.
These taxpayers suffer many disadvantages. They have the big disadvantage that they are unable, or do not know how, to get the best possible advice on how to arrange their tax affairs in the best way. Their income is at the lower end of the scale so that any tax which they have to pay is less easily borne. Added to this they also suffer from the restriction of the straitjacket of Schedule E.
In this connection, I quote from paragraph 118 of the Report of the Royal Commission on the Taxation of Profits and Incomes:
Few kinds of income are fairly represented by the gross receipt from the source concerned: most come into existence only as a balance between gross receipt and the expense involved in obtaining it." It is about the expense involved in obtaining the income that I speak now.
It is accepted throughout industry that companies and the self-employed are allowed to claim certain expenses against tax which the P.A.Y.E. taxpayer is unable to claim. This is stated under Schedule D by Section 137 of the Income Tax Act, 1952, which allows expenses "wholly and exclusively" incurred. The advantage of that provision applies to the self-employed and business corporations of one kind and another.
Those who pay tax under P.A.Y.E. are bound by the much more rigid rule 9


which provides that all such expenditure must be "wholly, exclusively and necessarily" incurred. This is far too tight a definition. The expenses of so many people in industry, in the professions and elsewhere, being the expenses of those who are employed, are growing in variety and becoming much more exacting. There are those who wrongly feel that the firm for which they work should meet all the requirements, whether in books, tools of trade or in other ways. In respect of tools of trade, it has been accepted for many years that there should be a certain exemption. It used to be, in the engineering industry, £10 a year, it became £15, and I believe that it is currently £18 a year—that is, expenses allowable in respect of certain tools of trade in the engineering industry.
6.45 p.m.
I maintain that this increase has only just kept pace with the cost of living and has not taken account of the increasing diversity of the tools and equipment required or the wider range covering the developing techniques and technologies which so many people have to use more widely now. People in this category suffer much more severely under rule 9 than do the self-employed and business corporations with whom this Committee is more generally concerned.
The self-employed doctor who buys his Lancet should not, in my view, be regarded as in a category separate from the employed engineer who must purchase his copy of Machinery. The business man who weekly buys his Economist and has this allowable against his tax charge should not be in a category different from the employed scientist who cannot do the same with the periodical Nature. This distinction between two categories of people in our society is quite artificial and unfair. The restriction imposed by use of the word "necessarily" in judging whether expenditure is allowable or not is unduly tight.
Even worse is the consequence of the spread of specialisation nowadays. Many people have to purchase instruments and books and other items covered by this new Clause which they might have managed without in the past. In the past, it was sufficient to have a few books on general matters in one's own subject, but now the growth of specialisation is such that virtually anyone in a

profession has to have a wide range of books covering abstruse aspects of his specialty. The same applies, though not in quite the same measure, to certain tools of trade.
If these things were needed before, they are even more needed today. Yet the use of the word "necessarily" in judging whether an expense shall be allowable or not excludes these books and equipment. For some reason or other, the Inland Revenue is not prepared to accept them as necessary for the purposes of the taxpayer's occupation.
I do not believe that there is a scientist or technologist who buys books which are not necessary to his profession or occupation. These books are bought, and no allowance is made for them. The books, equipment and instruments which are purchased are necessary for the taxpayer to earn his living. They are not like entertainment expenses. They are not indulgences. They are things vital to the taxpayer in the earning of his living. When such a person buys a microscope or an advanced book on jig and fixture design, these are necessary, they are bought and yet are not allowed.
Rule 9 is now coming to appear quite inequitable and should be changed. I should like to refer to six legal rulings on the application of Rule 9. I am not in the legal profession, but I am aware that comments of this kind are rarely made in that profession. Rule 9 has been variously described as:
Jealously restricted
Strictly limited
A very narrow and strict rule
Notoriously narrow in their application
Notoriously rigid, narrow and restricted in operaton
Stringent and exacting …. This case raises a question of hardship. I may go further and say, the position really is unreasonable.
These are all legal judgments. When we consider views of such great severity on the workings of a rule which affects 20 million people, we can appreciate that we ought to go furthur into this matter to see what can be done.
As I said, the amount of revenue raised under P.A.Y.E. was £1,477 million in 1963–64. I estimate, at a guess—it is not much more—that the cost of the Amendment would be about £50 million.
I hope that my hon. and learned Friend will give a rather more precise cost. In our present economic situation, I would be prepared to understand his difficulty in implementing some of the provisions of the new Clause——

Mr. Evelyn King: Did I understand the hon. Member to say that the cost of the tools or the cost to the Treasury of an Income Tax rebate would be £50 million? Surely the tools could not cost £50 million?

Mr. Sheldon: It is the cost to the Treasury. My figures are not much more than figures quoted out of the air, but if one estimates that 20 million people are already in receipt of some allowance for the purchase of overalls and tools of the trade, and assumes that most will make use of some of the advantages of the new Clause, one arrives at a figure of about £50 million. It is difficult to assess. I have been unable to get precise figures. It is difficult to say how much they would be likely to claim if the Clause were accepted. I mentioned the figure because I think that when one tries to reduce the Revenue, one should give some sort of estimate of how much one wants to take.
Although I understand that the present economic situation is not favourable to reforms that reduce the Revenue, I would point out that this should be one of the first claims on any concessions in taxation made in the future. Far better than providing tax reductions is to ameliorate gross injustices of so severe a rule. I look forward to the Financial Secretary's reply.

Mr. Frederic Harris: I put my name to the new Clause because I have always felt the same as the hon. Member for Ashton-under-Lyne (Mr. Sheldon). I have listened with interest to his case, which he has put so well that there seems to be little to add. I await the Financial Secretary's reply with considerable interest.
The only point which I found astounding and the first time I have heard such a figure was the hon. Gentleman's suggestion of a cost to the Treasury of £50 million. He is possibly not taking into account the considerable expenditure of this kind which is already incurred

by companies. For instance, a large number of companies provide overalls. That is not such a large expenditure for private individuals as it was 10 or 15 years ago.
The point which has always interested me is tools of the trade. It is with considerable pride, particularly if he is a mechanic, that a man looks upon his own tools——

Mr. Sheldon: I said that I took the figure out of the air, but I might give the basis for my calculations. They are terribly crude, but this was the only basis on which I could make such an assessment. I estimated 20 million people taking £15 allowance a year, which gives £300 million. I then took a tax rate, almost out of the air, of, say, 5s. This gave me a figure of just over £50 million It is not much of a figure and I do not put too much confidence in it, but that was the basis of my calculations.

Mr. Harris: I thank the hon. Member for that explanation, but he has possibly overstated the case. However, perhaps the Financial Secretary has a more accurate figure for the Committee.
A large number of people would not have to take advantage of all the provisions in the Clause, because some are already provided by companies. However, there are individual people, particularly mechanics, who have pride in their own tools, which we want to encourage. They do not want the tools provided on a general basis, but take their own with them. It is part of the trade and we want to encourage that keenness. We want them to have modern tools. Therefore, the figure of £25 in the Clause is not unreasonable and I support the idea.
It is very important for the Committee to realise that business houses provide the supplies which are mentioned in the Clause. This is where the anomaly and the unfairness arises. It has always seemed wrong that business houses—I have something of a vested interest to declare in this matter—should be able to supply these tools, books and, of course, overalls. They are allowed to write them off as general expenses allowable against profits from the tax point of view. Yet the individual cannot do that if he has the pride and the desire to do it himself.
That seems wrong. The hon. Member has done a service in putting forward this Clause. I hope that the Financial Secretary can indicate the way in which the Treasury might think in future. There is an anomaly and an unfairness here. If the companies provide everything, so that a workman need not have the pride in his own individual possession, this is set against their tax. But if an individual wants to provide his own tools and keep them all his working life, he is not given an allowance of this kind against his liability for tax. That is wrong.
I very much support the Clause.

Mr. Joel Barnett: I am glad to have the opportunity of highlighting an example of the harsh way in which the 20 million people on P.A.Y.E. are treated compared to those whose tax is assessed under Schedule D and, in certain circumstances, even under Schedule E, as regards directors. The Clause is not asking for very much for people on P.A.Y.E., but it does ask for a little, and will go some way towards compensating them for the harsh and unjust way in which they are dealt with relative to those taxed under Schedule D.
My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) has already referred to the word "necessarily". I have had some experience of the use of the word in dealings with the Revenue and it is at times treated in a way which I find a little difficult to understand. For, the way in which the word "necessarily" is strictly interpreted by inspectors of taxes is not always the same.
7.0 p.m.
However, I accept that much of what I want to do can be dealt with without necessarily having a Clause of this type. There are perhaps other ways in which it could be dealt with, which I hope my hon. and learned Friend the Financial Secretary will accept. The present rule is interpreted very rigidly by most inspectors of taxes. What I am asking for is a little less rigidity. A businessman or a director is dealt with under Schedule D with a little more flexibility. There are examples of how the rule is operated rather more flexibly for directors under Schedule E, and particularly under

Schedule D, where the word "necessarily" is not included.
I am not referring to claims submitted by some people which are tantamount to tax evasion, but to legitimate claims submitted by businessmen in respect of all sorts of expenses where the benefits arising from them are not easy to define. The inspector has to decide what is the reasonable percentage to be assessed as a benefit. What invariably happens in these cases—I certainly do not complain about this—is that the taxpayer is given a fair amount of latitude as to the percentage which can be negotiated. It depends on the person doing the negotiation and it will vary very considerably between one person and another.
Take the case of the benefit from private motor cars. The Revenue has in recent years been more stringent in calculating the mileage between home and business and the use at weekends, and so on, but whether the percentage is a fifth, a third, or half, does depend on the sort of negotiations and the negotiator. Then there is the question of wives working in a business. We know that most wives work in businesses and are paid up to £650 a year for genuinely working full-time in the business. They have to do that to have the claim allowed, but there is a little flexibility in the acceptance of the amount of work that a wife does.
There is also the allowance for homes being used for office purposes. It is amazing at times to find how many rooms in a house can be used for business purposes. So there is a degree of flexibility in the negotiation of the proportion of home expenses allowed. There is also flexibility over the use of telephones. One need not be cynical, but it seems that very few businessmen have private telephone calls. Postage and stationery expenses are wholly or largely allowable because they are almost 100 per cent. concerned with business purposes, or so we are told. Travelling expenses are another item on which people under Schedule D and directors can get a little latitude, but this does not apply to workers on Pay-As-You-Earn.
I do not complain about the fact that the tax benefit comes down invariably on the side of this category of taxpayer; indeed, I object very strongly to any "third degree" of taxpayers under


Schedule D with the object of squeezing out an extra bit of tax. It is worth while allowing a little extra tax relief over and above what perhaps the taxpayer is reasonably entitled to in order not to get the sort of third degree which a few inspectors tend to operate. I say at once that most inspectors, in my experience, are very reasonable and fair-minded but at times they tend to waste the time of businessmen in wanting to see them to discuss a minute percentage of private benefit. All that I ask is that those on Pay-As-You-Earn, if they are not to be treated equally, should be treated a little more fairly.
I have tried to ascertain what exactly is the amount of allowances given at present to all employees in industry for tools of trade and overalls. The research staff in the Library has not been able to get any information about this. They have tried the T.U.C. to see what is negotiated and they have tried the Inland Revenue. It appears that there is a variety of different allowances for different trades. I understand that there is a confidential document known as "3B" which is not available to anyone outside the Inland Revenue. Certainly, the Library was not able to get a copy for me. Apparently that document sets out the whole variety of allowances which are given for different trades and categories.
The Committee should be told what the allowances are for the various industrial categories. My hon. Friend referred to the engineering industry where, he understands, the allowance amounts to £18. I understand that in the textile industry it varies with different types of work, for example, taking into account whether the overall used is a long one or a short one. I understand that at one time the allowance was as small as £5, but it will probably be more now. It would be useful to know what allowance is given as a sort of blanket allowance to all the various categories of employees.
There is then the problem of teachers and lecturers and the use of books. I know a grammar school teacher, head of the English department, who recently spent £12 on a dictionary which was not provided at the school and which she thought would be very valuable in her

work. I consider that she could get an allowance for that, but there must be many teachers and other employees who do not claim for an item for which they could get an allowance.
On the other hand, I know of lecturers who are able to claim, and have claimed, up to two-thirds of this expense, as much as £90, for books, magazines and journals, I do not say that all lecturers are able to claim this. Many will be surprised that it is possible to obtain such allowances, but in certain circumstances it is possible to get the allowance and it has been obtained. One thing is quite clear. The present system is not only unfair between employees and businessmen under Schedule D; it is also unfair as between different categories of employees.
For workers in certain industries it is dependent on the ability of their trade union negotiators as to the amount which can be obtained from the Revenue in the particular industry concerned. With the greatest possible respect for trade union negotiators in their own field, in which I know they are very skilful, I think that when it is a case of negotiating tax relief with inspectors of taxes they are as babes in arms. I believe that there are greater allowances even under the present system which could be obtained by many millions of workers. One would like to think that more workers would submit claims for the allowance to which they may or may not be entitled.
We all know that under the old Schedule A claims could be made, but were not made and that many workers, whatever we do, simply will not submit claims. I am sure that even under the present rigid interpretation there must be many millions of workers who today are spending on overalls, books and journals, and could submit expense claims. If they pressed hard enough they could get some allowance, probably in many cases in excess of the blanket allowance given in their particular industry. I am particularly thinking of teachers and lecturers and even engineers who may be spending far more than the £18 allowance in respect of rather higher quality tools to enable them to do their job well.
I appreciate the difficulties of the Clause as it stands, because some individuals in a particular category will spend more than others. If we leave it entirely to the


individual to claim, many would not get the relief. As I say, there will be many who would not submit a claim, but it must be left to the workers to be able to do so if they wish. On the other hand, if the Board of Inland Revenue gave instructions to its inspectors to view this rule with slightly less rigidity than is done at present, it should not be impossible for various categories of workers to have negotiations conducted on their behalf to give them a rather better allowance than they receive at present.
It is not necessary to have legislation to do this. Something can be done immediately by way of concessions, such as the Customs concession given for the first £5. Something can be done without waiting for legislation. Certainly, I feel that the whole question should be approached with the desire to compromise on the side of the taxpayer, at least to the same degree as is clone in the sort of negotiations to which I have referred, about the percentage of private benefits for businessmen. I hope that my right hon. Friend will advise Her Majesty's inspectors of taxes to approach the matter in this way. There would then be no need for this Clause, although I am delighted that the debating of it has enabled us to shed some light on the rather rigid way in which the rule is at present interpreted.

Sir Stephen McAdden: I congratulate the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Sheldon) on the way in which he moved the Second Reading of the new Clause, which I will strongly support, and which, I should like to feel, the Financial Secretary would be able to support as well. The position is that there is this great disparity in the treatment of those on P.A.Y.E. and those taxed under Schedule D in that, as has been said, there is a greater elasticity in the treatment allowed in the case of Schedule D payers. It seems extraordinary that we should not make available to those who require books and the tools of their trade treatment at least as equally reasonable as we are prepared to accord to ourselves.
In my case, as a Member of Parliament, I do not find any difficulty in establishing a claim and being able to claim relief on books purchased in order that I may equip myself better to do my job. This is allowed, and it ought to be

allowed to teachers or other people in the pursuit of their occupation. I want to declare an interest here in making a special plea for nurses, because my daughter is a nurse.
I was rather astonished to find when I did what little I could to help her in the preparation of her Income Tax claim—not unaided but with professional advice as well—that, because she was provided with a uniform by the hospital, she could not make any claim for that uniform. That was fair enough, but surely people do not imagine that nurses go around the wards dressed only in a uniform, and that they do not have other things, such as stockings and shoes? Apparently the Inland Revenue makes a concession to nurses, who are allowed to claim up to £6 a year for stockings. That does not go very far but it is a concession.

7.15 p.m.

Mr. MacDermot: Does the hon. Gentleman get an allowance for his socks?

Sir S. McAdden: I do not think that that is quite a relevant interruption, but the socks that I wear, or do not wear, are not necessarily a part of my uniform. Nurses are expected to wear black stockings, and they would not be seen dead in black stockings outside their period of duty. They are compelled to wear shoes in which they would not be seen dead off duty, and there ought to be some concession for people who are compelled to wear the kind of things which they would not normally wear. They ought to have some kind of tax allowance. It is obviously impossible for the Treasury to consider every trade and single out the allowances which ought to be given to the nurses, or the builders or whatever trade.
But this kind of overall concession of up to £25 seems to be a very reasonable figure, and I hope that we may have some support in securing a concession from the Treasury on behalf of the many people who are engaged in occupations where they are paid on a P.A.Y.E. system, so that they may be able to enjoy the benefit of a concession of this kind which is long overdue. I hope that, if nothing else touches the heart of the Treasury, it will remember that those of us who are sometimes taken ill in this House or feel a little under the weather never hesitate


to retire to Westminster Hospital in order that we may be looked after.
Let us show the nurses at Westminster Hospital a little tenderness in return and accord them rather more than £6 for the relief of their tax. But let us not just grant it to Westminster Hospital; let all nurses share it. I hope that the Treasury will have an easy and comforting heart on this occasion.

Sir Gerald Nabarro: I would not support this new Clause, because I never believe in nibbling at a problem and this Clause nibbles at a problem. For 15 or 20 years in this Committee, when the party opposite were seated on this side, this subject was a hardy annual. The right hon. Gentleman the Member for Sowerby (Mr. Douglas Houghton) was a frequent performer: not every year but alternate years, drawing attention to the anomalies existing between Schedule D for Donald and Schedule E for Edward and how a person could secure certain allowances under Schedule D for Donald as a self-employed person, which were not allowed under Schedule E for Edward, because he was an employed person, or occupying an office of employment. Those are the two definitions applicable to Schedule E for Edward and D for Donald.
I have a very real interest in this matter resulting from personal experience, and I want something much more fundamental than this new Clause. I want the allowances as between Schedule D and Schedule E made uniform. That can be done by an addition to a Finance Bill but it would not be done in the form of a new Clause of this kind, which only nibbles in an administrative fashion through the machinery of Inland Revenue, dealing with what is at present an abuse.
Let me relate a personal experience, because it exactly touches on all the points made by the hon. Gentleman opposite. I once said in this Committee that I was assessed personally and simultaneously to Schedule A, to Schedule B, Schedule D, Schedule E and to Surtax. In contemporary circumstances I am only interested in the narrower consideration that I am simultaneously assessed to Schedule E and Schedule D. I am assessed to Schedule D as a journalist and broad-

caster and to Schedule E as a company director and employed person, and as a Member of Parliament.
When I challenged this at the Treasury a few weeks ago, and in the last Parliament but one, the Treasury reply was that I was treated as an employed person as a Member of Parliament, or as an occupant of an office of employment, and therefore I could not enjoy certain allowances under my Schedule E assessment which I could avail myself of under the Schedule D assessment.
I quarrel with the presumption of the Treasury that I am an employed person as a Member of Parliament. That was established in 1911 when Members were first paid by this House. No Member of Parliament has ever taken a case to the General Commissioners challenging that he should be assessed under Schedule E. I shall be the person to do so in due course, because I believe that I should be assessed under Schedule D. Nobody employs me as a Member of Parliament. The electorate does not employ me; the Government do not employ me; the Treasury certainly does not employ me. I am a self-employed person. If I could establish that I were a self-employed person, I would be assessed for Income Tax under Schedule D.
Here is the extraordinary situation. For purposes of the Selective Employment Tax—I am not going out of order; this is only a passing reference—I am a self-employed person and do not pay the tax as a Member of Parliament. The Treasury answered my Parliamentary Question on that two or three weeks ago. But for Income Tax purposes I am judged as a Member of Parliament assessable under Schedule E as an employed person. This is a serious anomaly.
I return to the words in this new Clause which are extremely interesting, drafted by a man—the hon. Member I fancy—who obviously knows a great deal about this problem. He refers to the purchase of overalls, tools of trade and books. My hon. Friend the Member for Southend, East (Sir S. McAdden) referred to being able to make reference books a charge against tax, which is very unusual, under Schedule E.

Sir S. McAdden: I managed to get it done.

Sir G. Nabarro: It is very unusual under Schedule E.

Sir S. McAdden: It can be done.

Sir G. Nabarro: It can be done, straining the case.
I wish to address my following remarks to the Financial Secretary. They deal with the most unusual case on record, and as it happened to me I should like the Committee to benefit from my experience. Many Members of Parliament have complained over the years that if they have a Press cutting service they cannot charge the cost of it against tax under their assessment of income as Members of Parliament because they are assessed under Schedule E. Shortly expressed, as a Private Member of the House of Commons, I cannot charge the cost of a Press cutting service against Schedule E; it is not allowed.
In 1954–55 I had a long battle with the Treasury about why it was not chargeable and I threatened to take the matter to the Commissioners. The then Financial Secretary to the Treasury, my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), saw me in the Lobby and said, "Gerald, my boy, you are assessed at present under both Schedule D and Schedule E. You are assessed under Schedule E as a company director and as a Member of Parliament. You are assessed under Schedule D in respect of your substantial income from television, broadcasting, and Press journalism. If you would be prepared to translate your claim in respect of Press cuttings from Schedule E to Schedule D, we will allow it". Therefore, I promptly transferred it and the Inland Revenue allowed it, not only in respect of that year, but for five previous years. [An HON. MEMBER: "Congratulations."] Do not congratulate me. I am up to all the tricks in taxation. I believe in paying as little tax as possible, not as much. I am very proud to say that, as long as it is legitimate, and it is always legitimate.
I give this only as an example of a ridiculous state of affairs. A man such as myself who is paying Income Tax under Schedule D and Schedule E is prompted by a Minister of the Crown to translate his claim from one to another in order to secure admissibility for a very important "tool of trade", as I call it.
How many hon. Members opposite would love to have the advantages as Members of Parliament of a Press cutting service? The hon. Member for Salford, East (Mr. Frank Allaun) has pressed his claim for years; but he has pressed it at public expense. I always say, "Do not do that. You have an income under Schedule D." The hon. Member televises occasionally, broadcasts occasionally and writes occasionally. He must have an income from these activities. Why does he not charge his Press cutting service against that income?

Mr. Leo Abse: The hon. Gentleman is doing an injustice to my hon. Friend the Member for Salford, East (Mr. Frank Allaun), whom he has misunderstood before. I want to thank the hon. Gentleman for giving me this advice some years ago, since I benefited from it. But my hon. Friend the Member for Salford, East wants a Press cutting service for the information of all hon. Members. It has nothing to do with his personal Press cutting service.

Sir G. Nabarro: I am grateful to the hon. Gentleman for his intervention. I bow at once. What he says may be so. But what I am seeking to point out is that hon. Members who happen to have incomes under Schedule D find this service available to them whereas it is not available if they have no income under Schedule D. That is a thoroughly incongruous state of affairs, and I quote it only because it is within my personal experience of tax claims.
The hon. Member for Heywood and Royton (Mr. Barnett) in his admirable speech, referred to schools and the cost of books. I had an animated correspondence recently with the vicar of Per-shore Abbey, in Worcestershire, which is a very famous church going back about 1,000 years. There is a Pershore festival every year which attracts a great number of foreign visitors and visitors from this country. The vicar was extremely aggrieved because in the conduct of his office as an Anglican minister of religion he had been having a long battle through his accountants with the Revenue about the cost of books. He sent me all the papers and asked whether I would take up the matter with the Treasury. I sent the papers back last week saying that I would not take it up and that it was a


waste of time to do so, because until the law is altered and allowances are made uniform as between Schedule D and Schedule E, I could not help my friend the vicar. He is assessed as a vicar under Schedule E, and the Inland Revenue, sternly applying the rules to which the Member referred, would not admit books, journals, reference documents and the remainder as a charge for assessment of tax under Schedule E.
7.30 p.m.
As I say, this is hardly annual. The right hon. Member for Sowerby and myself have argued it over the years. We have always arrived at the conclusion—and this is not a party political issue—that we would give a great welcome to any measure introduced by the Chancellor of the Exchequer of either party which would make uniform allowances under these two tax Schedules. This Clause would only nibble at the problem. I could not support it because I think that it would make the situation worse than it has been in recent years.

Mr. MacDermot: I should be disrespectful to my hon. Friends the Members for Ashton-under-Lyne (Mr. Sheldon) and Heywood and Royton (Mr. Barnett), who moved and supported the new Clause, if I were to adopt the language of the hon. Member for Worcestershire, South (Sir G. Nabarro); but I wish to adopt his argument.
The truth is—and we must face the truth—that the Clause raises one of the very big, contentious and difficult issues in our tax law, which is the difference in treatment under Schedules D and E. The Clause has been skilfully drawn. It limits the field to a very narrow compass. This is done intentionally, because if it were not so it would raise such a very big issue and such large sums of money, that there could be no hope of it being accepted, however well disposed one might be to it, this year.
The Inland Revenue prides itself on the fact that it tries to operate our tax system on the basis of principle. It is very important to maintain that basis of principle and not to make exceptions and alterations, however much we may be moved by sympathy for the arguments adduced on behalf of the Amendment, unless they are consistent with our general tax principles. If we were to

accept the Clause, it would be a toe in the door leading between the Schedule E and the Schedule D tax treatment. One cannot make a start in this field without facing the general principles.
The difference in principle is well known. Under the Schedule E rule, the employee or office holder, in order to be entitled to deduction for any expenses, has to show that he was obliged to incur them wholly, exclusively and necessarily in the performance of his duties or employment. As was stated by my hon. Friend the Member for Ashton-under-Lyne, this distinction was criticised by the Royal Commission, which thought that the rule should be brought into closer conformity with the Schedule D rule.
The method the Royal Commission proposed—different from that put forward in the Clause—was that the Schedule E deduction should be allowed for all expenses reasonably incurred for the appropriate performance of the duties of the office or employment. It expressed itself to be particularly concerned with the professional employee whose duties are not so easily denned and recognised. For the great majority of employees, the present rule does not create hardship.
The Royal Commission's recommendation has never yet been accepted. It has been rejected on the ground that it would permit deductions for a very wide range of personal expenditure by employees, much of which is incurred primarily for personal reasons. I do not want to argue here the wider question. I only want to point out that the Clause raises the issue and I do not think that we could accept it without facing that wider issue.

Mr. Barnett: My hon. and learned Friend has made the point that the Clause raises the wider issue. He previously said that we have not raised it. Indeed, we strictly limited the application of the Clause in order not to raise the wider issue because already an allowance is given for Schedule E. We would, therefore, not be breaching the general principle but only extending it slightly.

Mr. MacDermot: No. I hope to persuade my hon. Friend that it does breach the principle. By the wider issue I mean the principle. Although the extent of the breach is confined by the


terms of the Clause, it does breach the principle where it refers to tools of the trade. The difference between the two rules stems from the inherent difference between the two types of income. Whether one likes it or dislikes it, whether it is right or wrong, that is the origin.
The Schedule D rule approaches the matter from a different standpoint. It is not, like the Schedule E rule, concerned with a deduction for expenses which the office holder or employee is obliged to incur out of his emoluments. The approach is that, instead of stating which expenses may be allowed, it states what may not be allowed. The effect is that no sum
… shall be deducted in respect of—(a) any disbursements or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade, profession, etc.
The purpose is one of commercial expediency based on the decision of the person who is incurring the expenditure. Where an employee is obliged to incur any of these expenses, including the expenses of tools, overalls and books, he is entitled under existing law to claim a tax deduction for his expenditure. That is not as an exception to the existing law, but its application.
We can deal, first, with tools and working clothes. Deductions for the upkeep of necessary tools and working clothes are given already on a large scale to manual workers. It is a common practice for the Revenue to agree with the trade union concerned a flat-rate deduction for tools and overalls, given without a detailed claim, to all workers employed in similar occupations under similar conditions. Many millions of workers receive flat-rate deductions of that kind on their working tools and overalls.
These deductions are given in this way in order to save the immense time and trouble that would be involved in dealing with individual assessments. I assure my hon. Friend that the claimant is not bound by the negotiated flat-rate deduction. If he can show that he has been obliged to incur expenditure beyond the flat-rate deduction and can satisfy the conditions of the rule, he is entitled to a higher allowance.
The cost of these flat-rate deductions varies from case to case. They are all

negotiated with the individual unions and the order of total cost is about £25 million a year. If my hon. Friend wants particulars about any case I will be glad to supply them or, if he likes to put down a Question, the information will be provided. There is nothing secret about, them.
What happens from the practical point of view is that his tax return form tells the employee to put a cross in a particular box if there is a flat-rate deduction applicable to his case. His union will have told him if there is one. The flat-rate deduction agreed with the union is then applied. The result of this procedure is that, where employees are supplying their own tools and overalls, they are entitled to deductions but the employer who provides the tools or overalls is entitled to a deduction in his own tax assessment.
A much more difficult problem in my view arises in relation to books. Again, the Revenue seeks fairly and impartially to apply the existing rule and it is this which results in what appears to my hon. Friend to be discrepancies in treatment. They are not discrepancies. They are an attempt to apply the rule fairly and properly to different circumstances. The test is that the claimant is required to purchase books for use in the performance of his duties. This must vary according to the type of teacher and the type of work he is doing.
In practice, a claim by a university lecturer or a sixth form teacher who is required to provide his own books for use in class or for the preparation of lectures would normally be accepted. But, in the case of a teacher of subjects up to O level, the usual result is that he cannot establish such a claim because he is normally provided by the education authority with the books necessary for the performance of his duty.
I do not mean that he does not buy other books which relate to the subject—many do. But these are generally books of the nature of background reading and, applying strictly the terms of the rule, the position is that they are regarded and must be regarded under existing law as being reading which they have to undertake to keep them fit for performing their duties rather than actually carrying


out their duties. It is a logical distinction, although at times it may seem harsh in application.
Last summer, I received a deputation from the National Union of Teachers who raised this among a number of other tax issues which it wanted to put to us. I gave the N.U.T. the answer which I am now giving to the Committee. I said that I did not see how, in general, any different treatment could be given to the teaching profession which would not have to extend over the whole range of the many other people who would be in a similar position. I am sure that there are many civil servants who do background reading of books and journals which are relevant to their work, but which are not, as it were, required reading. The same must apply to technicians and many people in scientific occupations.
It may be argued that the words "wholly and exclusively" would be a sufficient protection in the Schedule D rule, but, unfortunately for this purpose, those words have been interpreted over and over again as permitting, where required, the apportionment of any expenditure which has a dual purpose. This, again, would present quite formidable problems of administration, for the whole range of employed persons would be able to enter into this sort of argument as to what was the proper apportionment.
I think that my hon. Friends would agree that, if we accepted their proposals, we could not avoid extending them over a whole lot of other expenditure, going beyond books to periodicals and to training and refresher courses, an issue raised in our debates last year, to further education, or any other expenditure which had a necessary link with the job. As I pointed out to the N.U.T., many of the things for which it was asking were similarly related.
To accept the proposal of my hon. Friends would raise this major issue of principle, which, no doubt, one day the Committee will have to face and about which it will have to decide. But, clearly, there can be no question of making an alteration of this kind in a year when my right hon. Friend is finding it necessary to impose additional taxation rather than give relief from taxation. The difficulties would still be quite formidable.
Whatever one's wishes, in a matter like this one must look at the administrative implications.
Unless one could achieve something comparable to the agreements prevailing at the moment in relation to tools of the trade, it must mean opening up the possibility of individual negotiations for these relatively small sums and involving a high proportion of 20 million taxpayers, and the criticisms which we now receive about the increase in the size of the Civil Service would appear as nothing compared with what we would hear following such a change.
7.45 p.m.
I was asked about the cost. It can be only a theoretical estimate. I am advised that the theoretical maximum cost would be £100 million; that is to say, if all taxpayers assessed under Schedule E were to be entitled to claim a deduction of £25 replacing any deductions already allowable in terms of the tools of trade the theoretical maximum would be £100 million. I do not think, however, that anyone would expect that to result. There would obviously be many employees who would not spend and would not claim the full £25. But the expert statisticians in the Revenue do not feel that they could make a useful estimate of how much it would be within that figure.
The real danger from the Revenue's point of view is not so much the cost which would be involved, but that it would be opening the floodgates to a very much wider relief if we were to accept this abolition of the distinction between the Schedule D and the Schedule E rules.

Mrs. Margaret Thatcher: I do not wish to detain the Committee very long, because most of the arguments have already been deployed. It is always tempting to those of us interested in taxation to have a very long intellectual argument about matters which we find extremely interesting from our professional work. However, I want to raise only one or two issues.
We all understand that so far we have not come to grips with the differences of computing expenses in Schedule D and Schedule E. This has been a problem for a very long time and most of us have quoted the words in paragraph 140 of


the Final Report of the Royal Commission on the Taxation of Profits and Income, the words which the Financial Secretary quoted and which are:
The wording that we propose would allow the deduction of 'all expenses reasonably incurred for the appropriate performance of the duties of the office or employment'.
That would have applied to both Schedule D and Schedule E and the rules for assessment would have been the same.
In considering what Amendments to put down to any Finance Bill, this is obviously one proposal which comes to mind, because there are still some recommendations of the Royal Commission which have not been implemented. However, I was a little surprised by the Financial Secretary, because he appeared to say that the Revenue had rejected that solution. I think that he said that by implication. I am not sure whether that has ever been said before. If it has, then we must all think again, because if the Revenue has rejected that solution, we must recognise that there is still a problem on the broader issue to which we must try to find some alternative broad solution, because this problem will remain until we do and it should not rest until we have another Royal Commission.
The problem on the broad issue is not that the law is unclear about Schedule E, but that it is very clear. Going through the cases and looking at the definition of "necessary", one finds that to be deductible expenses must be those which each and every occupant of the particular office is necessarily obliged to incur for the performance of those duties. It means that it does not matter whether the teacher is good or bad, or needs or does not need a Latin dictionary. If every teacher had to have a Latin dictionary, that would be deductible. Merely because it is reasonable for a teacher to have an extra dictionary at home, or desirable that he should, does not render it deductible.

Mr. Barnett: I am not sure whether my hon. and learned Friend was saying that. I understood him to say that it was being rather better interpreted from the teacher's point of view and that it would be allowable in the sort of case which the hon. Lady has mentioned.

Mrs. Thatcher: Then we are differently interpreting the Financial Secretary. The words I quoted were quoted directly from a particular case and I would have thought that the test was not whether it was desirable that a teacher should have it, but whether every teacher who held that post should have that book. That is the test upon which Schedule E proceeds.
The problem arises, as I have said, because the law is clear. Occasionally, there are one or two difficulties about applying it to a particular case and deciding the facts of that case. If I had been the hon. Member for Worcestershire, South (Sir G. Nabarro) I would have felt bound to have a crack about the case of the vicar who had to have a certain number of books, because I would have thought that it was arguable that any person who held the office of vicar would have to have had a certain number of books for the performance of that office. Perhaps we can get together and advise my hon. Friend the Member for Worcestershire, South afterwards and have a go at this one. [Interruption.] I wonder whether it might not be better if nurses did not have to wear black stockings. It would obviate so much trouble.
We have heard a great deal about Schedule D for Donald and Schedule E for Edward. Perhaps it is not inappropriate to comment that D for Doreen and E for Edwina find that stockings get ruined in the Palace of Westminster because there seem to be so many splinters on chairs in the Dining Room. However, D for Doreen and E for Edwina, if we were dealing with both Schedules, would not want to claim a personal Press cuttings service under Schedule E for that amount. Perhaps this proves that the female of the species is not so vain as the male. This is one conclusion which could be drawn.
Our problem is this. The wider issue has yet to be solved. The Financial Secretary appears to have rejected the only possible solution which has yet been put forward by a body of persons appointed to try to find a solution. The law on Schedule E seems to be fairly clear, but we do not like that particular law, because it leads to anomalies and hardships.
Therefore, we come to the narrower issue. I am very concerned, as are the


hon. Members who have supported the Motion, about those who must have, or who ought to have technical books. I could not go back to my former profession—that of research chemist—without having a large number of technical books. Nor, indeed, could I ever have kept up with it without having my own supply of technical books. However, I do not think that they would have been allowable. I am thinking, too, of nurses and people such as physiotherapists, who constantly have to deal with new equipment. It may not be strictly necessary for them to have books of their own, but they ought to have them.
We tried to go some way towards this in the Finance Act, 1958, which, the Financial Secretary will remember, allowed for the first time fees and subscriptions to professional learned societies. From that time such fees were deductible for tax under Schedule E. Could an extension of that be considered, possibly for next year, so as to allow certain technical and reference books to be deductible?
I am concerned about this. It is ironic that I had the British Tax Encyclopaedia. I could not get it as a Member of Parliament, but as a lawyer I could. I am sure that the Financial Secretary will agree that I ought to have the book in my present job as a Member of Parliament, if only to argue the better with the hon. and learned Gentleman, which would be a very good reason for having it. He has the book in the Treasury. Therefore, he has an advantage over me. Although we have the book in the Library, we have only one copy between all of us who want to borrow it from time to time.
I am especially concerned about those who must keep up with the latest developments, whether they be scientific, technical, legal, or even accountancy. Such people must keep up-to-date. On the narrower issue, we should consider, at any rate for next year, if not for this year, how to find some way, possibly a similar method to that used in the Finance Act, 1958.
I recognise the difficulties which the Financial Secretary has put before the Committee. It would be impossible to consider any extension of anything like the order he mentioned this year. For

that reason, I would recommend my hon. Friends not to pursue the matter, but I imagine that before such an eventuality certain other action will be taken. However, I hope that we shall pursue both the broader issue—that is, the differences between Schedule D and Schedule E—and the smaller issue if, in the meantime, we cannot get a final decision on the broader one.

Mr. Barnett: I am conscious of the administrative difficulties. Indeed, I referred to them myself. I ask my hon. and learned Friend to look again at the point I made about the strictness of interpretation, the rigidity with which these rules are often interpreted in different branches. Perhaps my hon. and learned Friend would consider the question of many employees, such as the teacher whom he mentioned, who are entitled to claim in respect of certain books, but who do not do so because they are unaware of their entitlement. It would be helpful if teachers and lecturers were made aware that they could claim. I beg to ask leave to withdraw the Motion.

The Temporary Chairman (Mr. Brewis): The Motion will need to be withdrawn by the hon. Member for Ashton-under-Lyne (Mr. Sheldon), who moved it.

Mr. Sheldon: I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(INCOME TAX: RELIEF IN RESPECT OF WIFE.)

In section 210 of the Income Tax Act 1952 (personal reliefs) as amended by section 12 (1) of the Finance Act 1963 and section 10 (2) of the Finance Act 1965 in paragraph (a) of subsection (1) (married) for the reference to £340 there shall be substituted a reference to £440; and subsection (2) of the said section 210 is hereby repealed.—[Mr. John Lee.]

Brought up, and read the First time.

Mr. John Lee: I beg to move, That the Clause be read a Second time.
I hope to set a record this evening by stating my argument in the shortest possible time, because the Clause deals with a singularly uncontroversial matter. I want merely to draw attention to an anomaly in the law which has existed for a long time. It is an


anomaly that is well known to people who concern themselves with tax law. It is one which should have attracted a great deal of attention and interest on the part of lady Members of Parliament.
From the tax point of view, it is much more advantageous to live in sin, if one is a working person, and if one's male lover is working, than it is to be a married woman and to be employed. This is an extraordinary situation when it is remembered that our society regards marriage as socially desirable. It is a tax situation which most people have deplored for many years.
I do not know what the cost of the new Clause would be. I dare say that my right hon. Friend the Chief Secretary will have something to say upon that aspect. When this matter was examined only a few years ago, it was found that the cost of the change would have been very small. My sole purpose tonight is to draw attention to the anomaly. Even if a concession cannot be granted now, I hope that a concession can be given within a short time so as to put right something which must be the cause of a great deal of offence to many people.

Mr. Diamond: My hon. Friend the Member for Reading (Mr. John Lee) certainly moved the Clause with commendable brevity. I want to respond in a similar way and tell him some of the reasons, both in terms of cost and in terms of logic, why the Clause could not be accepted.
My hon. Friend says—we have heard this before—that it is cheaper to live in sin in certain circumstances than it is to live a respectable married life. Fortunately, my responsibility is limited to explaining the Income Tax position, and I would not dream of offering a comment of any kind on any moral issue.
As my hon. Friend no doubt realises, the general expenses of a married couple are not necessarily—let me put it at its minimum—twice those of a single person. This is recognised in the difference between the allowance for a single person of £220 and the allowance for a married person of £340, as opposed to the £440—double the single allowance—proposed by my hon. Friend.
I recognise that my hon. Friend is on solid ground in drawing attention to the fact that the additional amount—

the difference between the married and the single allowance—is perhaps a little on the low side. It is now somewhat less in percentage than it earlier was. Therefore, there is, perhaps, something to be said for an improvement in the married man's allowance, but my hon. Friend is mistaken in believing that this would not be expensive. It would be extremely expensive, as I shall shortly explain, and would for that reason be quite out of the question this year, when I am afraid there is no money to spare, as has been pointed out, for tax reliefs.
8.0 p.m.
My hon. Friend did not go at length into the second part of his proposal dealing with the wife's earned income allowance, but as this is of general interest, I will comment on it. A married woman, if she has an earned income of her own, will receive special earned income allowance, known as the wife's earned income allowance. This amounts to seven-ninths, which is the balance after the two-ninths to which a married couple would, in any event, be entitled. She gets an additional seven-ninths of earned income, with a maximum allowance of £220, which is set off for Income Tax purposes——

Mrs. Thatcher: Mrs. Thatcher rose ——

Mr. Diamond: —but not for Surtax purposes, as the hon. Lady the Member for Finchley (Mrs. Thatcher) was, I am sure, about to remind me.
As my hon. Friend the Member for Reading also no doubt recollects, a special set of reduced rate reliefs is also available against a married woman's earnings. That applies on the first £100, having been given the earned income relief and the wife's earned income allowance. There is a tax at 4s. in the £ on that, while on the next £200 it is at 6s. in the £.
The new Clause would abolish the wife's earned income allowance but leave untouched her right to special reduced rate reliefs. This would give a married woman who is earning the same basic reliefs as those of a single person. The special reliefs for wife's earnings take into account the fact that extra expenditure is involved in keeping the home going when she goes out to work. My hon. Friend's proposal would reduce this


advantage for a family with a working wife over the single woman or widow and it would also greatly reduce the disparity between a family where the wife works and the family where she stays at home.
The cost of my hon. Friend's proposal would be substantial. Since the new Clause is in two parts, I will give the cost in two parts. The proposed increase in the married man's allowance, from £340 to £440, would cost the Exchequer £320 million in 1966–67 and £400 million in a full year. The abolition of the wife's earned income allowance would yield £210 million in 1966–67 and £265 million in a full year. Thus, the net effect of the full Clause would be £110 million in 1966–67 and £135 million in a full year. That is a very substantial cost indeed and the effect of the Clause would be to give appreciable benefits to couples where the wife did not go out to work, the cost of which, in effect, would be offset by extra taxation on all couples where wives earn £220 a year or more, and in some cases where they earn less than that.
Having regard to the fact that, within reason, the tax system wants to take account of the economic situation of the country, and to encourage married women, particularly teachers and so on, to return to work in appropriate circumstances, I think it right that the allowances should be framed as they are. However, my hon. Friend has done a service in drawing this matter to our attention. I am always glad to remind the Committee and the public of the extent to which married women earning income are treated with appropriate (generosity for tax purposes in terms of their allowances.
I am grateful to my hon. Friend for raising the matter, but I am sure that he appreciates, having regard to the cost involved and the arguments I have deployed, that I cannot recommend acceptance of the new Clause.

Mrs. Thatcher: The hon. Member for Reading (Mr. John Lee) does not believe in doing things by halves. I can well understand that he wants to give more in benefits in respect of the allowances to wives who stay at home, but I was absolutely appalled to learn that he

would be prepared to withdraw the wife's earned income relief to do it. I know exactly what would happen. Many of the women on whom the nation has spent a great deal of money, in giving them professional training, would no longer find it worthwhile to go out to work.
The hon. Member for Reading was not with us last year when we deployed this argument extensively at a time when married women were put in a slightly worse position by virtue of the previous Budget because if they had young children and had to employ women to look after them, and had to pay the employer's part of the National Insurance stamp, the relief for that part of the stamp was withdrawn. If one adds to that the effect of this year's Budget, under which some married women must pay an extra 12s. 6d. in Selective Employment Tax, for which they cannot get tax relief—then if one took another swipe at them by withdrawing the £120 personal earned income relief, the hon. Member for Reading would find that he would be very short indeed of teachers, nurses and many married women who go out to work but for whom the incentives are not over great at present.
Like the Chief Secretary, I recognise that this is not a year in which to give extensive tax reliefs. But, equally, it is not a year in which to withdraw the reliefs which have already been given. In the Budget this year the Treasury, through its S.E.T. proposal, has already had a crack at married women who go out to work. Let us not do anything worse by withdrawing the earned income relief. When I looked at the new Clause I thought that it was a typical bit of Socialism, for it would give something with one hand and take more away with the other. For that reason, I could not support it.

Mr. John Lee: I am grateful for the courteous and comprehensive explanation given by my right hon. Friend the Chief Secretary and also for the comments, though they were slightly more controversial, of the hon. Member for Finchley (Mrs. Thatcher).
Although not entirely satisfied, I understand the difficulty and beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(INCOME TAX: RELIEF ON MEDICAL INSURANCE SCHEMES.)

Tax relief shall be available to all persons who make payments to contractual medical treatment insurance schemes. The relief shall be at the same rates as apply to life assurance policies.—[Mr. Maurice Macmillan.]

Brought up, and read the First time.

Mr. Maurice Macmillan: I beg to move, That the Clause be read a Second time.
About 20 hours ago I confess that I had a feeling of some disappointment, almost a sense of grievance, but at least some clouds have a silver lining and I therefore begin by expressing gratitude to the Chair for giving me this unexpected opportunity to submit the new Clause. Its object is to attach to payments made to medical treatment insurance schemes the same tax relief, on precisely the same conditions, as now attach to life insurance policies.
I need not weary the Committee with the details, which will be familiar to hon. Members. Suffice to say that if a premium is up to £10, the tax relief is on the whole amount. If the premium is between £10 and £25, the tax relief is on £10 only. If the premium is over £25, the tax relief is on two-fifths of the premium, and there are other complicated provisions which to some extent safeguard the Inland Revenue.
The schemes to which I refer are those mentioned earlier in our debates by my hon. Friend the Member for Somerset, North (Mr. Dean); such organisations as the British United Provident Association, the London Association for Hospital Services and the Western Provident Association.
I hope that the Committee will forgive me for quoting the British United Provident Association or, as it is more commonly known, B.U.P.A. It is by far the largest and the most comprehensive of the schemes and, as a result, has more of the conditions which they all share than do the others.
To give some idea of the size and scope of its operations, it provides assistance towards the cost of serious illness, specialist attention in hospital, nursing homes, and so on. It also provides benefits for out-patients' specialist home nursing, and, as an optional extra, help with the cost of the family doctor. There are

some 550,000 registrations, covering about 1,150,000 men, women and children. It is worth remarking that some 70 per cent. of its membership is in staff or other group schemes. Of those, some 76 per cent. are those in the type of scheme for which the employee pays, some 16 per cent. in the type for which the employer pays, and 8 per cent. in the type for which the employer and employee pay half and half.
The total number of groups is some 6,428, and that includes persons who are covered in the professions and trades, about 250,000; students, 3,800; and, in the school scheme, something over 15,000 children. The types of people included in these schemes are varied in the extreme. I looked down the list of groups at random and found that it included accountants, chemists, printers and stationers, members of Her Majesty's Forces, publishers, I am happy to say, and staffs of Government Departments. There are a number of public boards and nationalised industries which participate in schemes, such as the B.B.C., the National Coal Board, the British Transport Commission, and the National Union of Teachers.
I give those figures simply to show that there is no question of any of the schemes being a method of evading the rigours of the National Health Service rather unfairly, jumping the queue or anything of that sort. They cover people in a wide range of employments and a wide range of income groups. The totals using these organisations show quite clearly a demand for this type of supplement to the Health Service and the need for the type of self-help which they provide.
I should like to put it to the Committee and to the Government that it is a type of scheme which should be encouraged. It provides thrift and self-reliance. We should not be priggish about it; it is worth doing something more than merely not discouraging people from helping themselves. Over the years, we have heard from the party opposite how materialistic our society has become under Tory rule and about the wasteful spending that goes on. If we are to get a more moral tone into our society, we must allow and not condemn those who try to help themselves and, in doing so, choose the private sector


without in any way criticising those who choose the public sector. We should try to encourage the freedom of choice. It is a freedom which only makes sense in the context of plans such as these, which require a contribution from the individual. I hope that hon. Members opposite will accept, as we do, that freedom and responsibility go together.
8.15 p.m.
We accept on this side that the element of competition provided by such plans, and the nursing homes which go with them in some cases, is itself beneficial. When I say "competition", I do not mean commercial competition, but competition in care. I hope that I have shown that there is a large, growing and broadly based demand for medical treatment insurance schemes, and that that demand can and should be encouraged in our type of society.
Secondly, I want to show that B.U.P.A. meets that need efficiently. As I hope the Committee will understand, I include the London Association for Hospital Services and the Western Provident Association and all the others. It is rather long-winded to list thme all every time that they are mentioned. I merely quote B.U.P.A. as an example.
The fact that these plans meet the demand efficiently is shown by the way the main scheme operates. It grows at the rate of some 10 per cent. a year in membership, and the lapses from membership, including those by death, are 3½ per cent. a year. That it is efficient is shown by the fact that its administrative costs, unlike some voluntary organisations, are only 9· 1 per cent. of the subscriptions. I might say in passing that I wish that publishing businesses could operate with an overhead of 9· 1 per cent. of turnover. However, that overhead leaves some 88· 9 per cent. of subscriptions for claims, with 2 per cent. annually going to reserves.
B.U.P.A. is efficient in the way in which it meets that demand, and that is shown by the record of the Nuffield Nursing Homes Trust, which is its daughter organisation providing nursing home beds. Even a cursory glance at the figures shows the success which it has had. Taking those for the month of November, 1965, it provided some 386 beds in

all, with over 78 per cent. occupancy and 784 admissions in the month. There were well over 8,396 patient days, which is a curious phrase.
Lastly, the claim of B.U.P.A. and other similar schemes to meet the need which I have shown is indicated by the contribution which they make to the country as a whole. They encourage and stimulate growth in the total resources available to our National Health Service, both the private and public sectors, and they lessen the burden on the taxpayer. I know that it is sometimes argued that such private plans lead to a turning away of resources from the Health Service. I do not think that that is true. There are many other things which turn away doctors and nurses from the Health Service, and I cannot help thinking that many doctors who now emigrate would probably turn to work under such plans as these if there were more scope available in them than there is now.
Another important aspect of the work of these organisations is in reinforcing shortages of hospital beds in specific areas. The Nuffield Nursing Homes Trust started life for that purpose. Its aim is to meet, and not a desire to compete with, a need which for some reason or another could not be met in any other way. I hope that I have made my second point, that not only is there a need, but that the need is adequately and successfully met by B.U.P.A. and the allied organisations.
I come now to what I am sure the Chief Secretary will regard as the crunch. Why should such plans be encouraged by tax concessions, and why should such tax concessions be built on the pattern of life assurance? As I am addressing the Treasury Bench, I shall quote pre-dents first. Such tax concessions are available to superannuation, retirement, annuities, and occupational pension schemes, as well as life assurance.
I think that I know what the Treasury answer, or perhaps it is more correct to say the Inland Revenue answer, will be—that if there is a precedent it was a mistake to let it happen in the first place, and it is wise to confine it as narrowly as one can now. That is the answer which has repeatedly been given to me when I have tried to extend the tax concession to contractual saving schemes.
Years ago I wrang one concession from the Inland Revenue and I should like to quote it because I think that it is relevant. The concession was that it might possibly be permissible to encourage, through the tax system, savings for a rainy day, for old age, for the education of children—not for the acquisition of wealth—and, lastly, for sickness.
I think that the underlying reason behind this concession was that it was felt that such socially acceptable objectives as putting by for a rainy day, saving for old age, and trying to provide for the education of children, provided a sort of moral equivalent of life cover, because, as the right hon. Gentleman knows, it was the absence of life cover which destroyed the argument for extending tax concessions only to savings in many Finance Bill debates over the years.
I suggest that this Clause meets the conditions, that it is something which is socially acceptable and desirable, that it is not inflationary, and that it has none of the conventional disadvantages which the Treasury and Treasury Ministers quote so frequently when one tries to get concessions from them on these lines.
There is one additional argument this year, that because of the Selective Employment Tax—and I am sorry to have to come back to this after about 33 hours of solid debate on it—one must in fairness admit that through the employment of ancillary staff, the costs of doctors, general practitioners, and specialists will go up, and because of the failure to get my hon. Friend's Amendment accepted yesterday, the expenses of these organisations will increase.
My hon. Friend the Member for Somerset, North said that this tax would mean an addition of £24,000 in a full year to the administrative expenses of these organisations. In 1964 these amounted to about £643,000, and unless my arithmetic has gone awry, this is a direct increase of about 3· 7 per cent., which is quite a lot to bear for an organisation which manages to keep its total administrative costs down to just over 9 per cent. of its income.
The expenses of subscribers to the scheme will go up as prices rise owing to the Selective Employment Tax. I think that there is a practical reason for helping these organisations which

perhaps might appeal to the Chief Secretary more than the previous arguments I have put forward. It is that if something is not done to help these organisations, their rate of growth may well be checked, and when we come a little later to consider the cost of the concessions for which we are asking, I hope that I shall be able to show that any check in growth, or any diminution of the services provided by these organisations, will increase the burden on the National Health Service and on the Exchequer.
I hope to show that although I am asking the Chancellor to make a tax concession, it is one which I believe will save him money. I think that there is a strong case for such a modest tax concession as this, and I suggest that it should be used to encourage those schemes which I have shown have met the proven need of a large number of people.
Finally, I come to the cost. I find it impossible to estimate the total cost, but I have tried to do a somewhat curious sum based on the typical tax saving of the typical life assurance investor set out in a popular Income Tax guide and applied it to the total number of people in B.U.P.A. On a premium of £50, at two-fifths, a £20 reduction in chargeable income at 8s. 3d. in the £ amounts to a loss of actual tax of £8 5s. 0d. If this is multiplied by the 600,000 people registered with B.U.P.A., it comes to just under £5 million. If we add one-fifth for the other organisations, it comes to nearly £6 million. If we call it a £6 million reduction of tax and double it for luck, it will still not break the Exchequer, even in a year like this, when the Chancellor is trying to reduce spending power, because, as I have shown, anything spent through these schemes is spent as an alternative, and not as an addition, to money which would otherwise have to be spent by and through the National Health Service. This point becomes even more valid if we consider the differences in costs between the National Health Service and private organisations.
8.30 p.m.
The total cost of providing a National Health Service bed in a new hospital is about £14,000. Beds provided in conversions of old buildings are cheaper. I want to quote four typical examples relating to the Nuffield Nursing Home Trust.
At Edgbaston the cost is £7,090 a bed; in Hull it is £5,330; in Woking it is £4,280, and in London—most expensive of all—it is £10,220. In respect of the cost of providing new beds in nursing homes or hospitals, on the figures that I have been able to obtain the Nuffield Nursing Home Trust compares very favourably. I should explain that it is not the bed alone that costs £14,000; it is the provision of the full services of a modern hospital for one patient.
The running costs do not show quite such a spectacular difference. If we take the Nuffield Nursing Home Trust and some other hospitals and nursing homes and charge in order to show a surplus of two guineas a week, with an 80 per cent. occupancy of the nursing home, the figure for Edgbaston is 40 guineas a week; for Hull and Woking it is 39 guineas per week, and for London, again the most expensive, it is 48 guineas a week. Those are the running costs as calculated at the Nuffield Nursing Home Trust. The average weekly in-patient cost to the National Health Service in acute hospitals amounts to £39 14s. 5d.; in London teaching hospitals, to £50 13s. 9d. and in provincial teaching hospitals, to £45 6s. 2d. Those are for beds in public wards. I have not carried out the more accurate calculation and added in the extra cost of providing private beds, on which the Nuffield Trust figures are based.
I do not suggest that too much can be made of these figures; they are not a strict comparison, because if the concession for which we are asking causes some growth the cost to the Exchequer obviously rises, but if the concession does not do this there is no cost to the Exchequer. It would be better to regard the concession for which we are asking as being in the nature of an investment tax concession, and I have indicated that its cost is not likely to be too high, because the charges are not altogether onesided.
At best, the cost of the concession—which I have shown to be otherwise worthwhile—even without taking into account the help provided by using available resources, will not be excessive. I have tried to argue this case as closely, quietly and non-controversially as I can, because I believe that it is a valid one. I think that I have shown that these

schemes meet a widespread and diverse need efficiently and economically; that they are worth encouraging for this reason and because they benefit the country, including the National Health Service. They are increasing our total available resources and are taking some, at least, of the burden off the taxpayer. I submit that they are therefore worth a tax concession, which I hope meets the Inland Revenue specification, which is socially as well as economically desirable, and in respect of which the cost to the Exchequer, even without the reciprocal benefits—which could be very significant—is not very great.
I believe that I have demonstrated that to the Committee. I hope that I have convinced the Chief Secretary, and I ask him to consider the Clause with sympathy or, if that is asking too much of a Treasury Minister, at least without prejudice.

Captain Walter Elliot: I support the new Clause. The Government should have no difficulty in supporting it as well, since they tell us, quite sincerely, how, in principle, they are against taxing the sick. They should accept a Clause which offers tax relief to those who make insurance provision for some amenities when they become sick.
One of the principles on which the Treasury often relies to rebut our request, when we ask for concessions of this sort is that when the sheep are shorn they can do what they like with such wool as remains on their backs I hope that the Minister will not put forward that argument tonight, because the principle has been breached. For example, life assurance premiums and mortgage interest payments qualify for tax allowances, so that this is no longer a principle on which the Treasury can stand.
Another argument that the Treasury is very fond of putting forward—it has been done earlier tonight—is, "We recognise what a worthy object this is, but if we give way on it we shall have to give way on an enormous number of other things, and that is out of the question". I hope that the Minister will not put forward that defeatist argument.
It is not beyond the ability of the clever civil servants in the Treasury to differentiate between the essential and valuable things and those that are not


so valuable. I have always thought that an unfortunate thread often runs through Socialist thinking. If somebody wants to pay for something that he could otherwise obtain for nothing, thinking that by paying he will get an improvement, Socialists are suspicious. They think that there is something slightly disreputable about it. They are also inclined to think that if everybody is not in a scheme, if people opt out of it, then, again, there is a trick, and they are up to no good. I hope that in considering this Clause the Minister will free his mind from that sort of idea.
More and more people, as they become better off, prefer to do things for themselves. That is one of the characteristics of this country today. In addition, many people who are not so well off pay their own way, often at great financial sacrifice, and pay for many things that they could otherwise get for nothing. A typical example, apart from health insurance, is people paying for the education of their children. Proposals for tax relief on that are often opposed. It is said that these are the people who can afford to pay, and they should not have tax relief. But that is by no means the case.
When people decide to join a medical insurance scheme they do so because they want some privacy in circumstances of sickness of themselves or their family. Many people want privacy in those circumstances, although others do not. It is a perfectly reasonable object, and they may well, in paying for their sickness insurance, have to give up other things which they might otherwise be able to pay for. What they obtain is, perhaps, some privacy and better accommodation, and part—usually only a part—of the cost is refunded under the insurance scheme.
I suspect that the Minister may well advance the argument that, if this sort of thing is encouraged, the National Health Service will be undermined. I do not accept this for a moment. The Health Service in many sectors, particularly in the hospitals, is greatly overburdened. The practice of some people in insuring themselves tends to take the pressure off the Health Service. The better amenities or a little privacy which they secure for themselves are perfectly reasonable things to want.
It should be our aim to encourage people to do things for themselves, if they can. If it could be proved that this sort of practice undermined the Health Service, I agree that that would be a powerful argument against giving the concession. But I do not believe that it can be proved. Such weaknesses and overstrain as the Health Service shows stem from other causes quite unconnected with this sort of thing.
We encourage people—at least, we on this side of the Committee do—to buy their own houses. We give tax concessions if they take out mortgages. We encourage them to insure their lives, and again we give a tax concession. I would like to encourage them to do many more things by giving a tax concession, to educate their own children, for example. Plainly, a tax concession for health insurance would be excellent, and I hope that the Government will accept it.

Mr. Laurence Pavitt: The only point of sympathy I have with the hon. Member for Farnham (Mr. Maurice Macmillan), who moved the Second Reading of the new Clause, is in the 24 hours we have spent in the Chamber and the fellow feeling which every hon. Member on either side has towards another who has sat through 7½ hours' debate and been unable to get called. I hope that my right hon. Friend the Chief Secretary will resist this Clause with the utmost power which the Treasury can command. Having been under the pressure of the Treasury in the small hours of this morning, I know what that pressure can be.
I shall not go far into the financial arguments. I look at the Clause purely from the point of view of our health services. The hon. and gallant Member for Carshalton (Captain W. Elliot) was quite right when he said that the main function of the B.U.P.A., the London Provident Society and other similar schemes is to provide a convenience, some privacy and some amenities, nothing whatever to do with sheer health. If a patient in hospital needs privacy, the consultant will give it on health grounds. It is not given for reasons of convenience.
Some of the objects of these health insurance schemes are dangerous for the Health Service, on two grounds. First,


the taxpayer is already paying for most of the services which an insured person will use. For a doctor the taxpayer pays £7,500 in order to educate him over the seven years before he qualifies. As for hospital beds, the B.U.P.A. will, in the main, use beds which are organised under the regional hospital boards or, perhaps, the teaching hospitals—either amenity beds under Section 4 or pay-beds under Section 5—and these, too, are provided by the taxpayer already.
As for professional medical services, the consultant will usually be what is known as a nine-elevenths consultant, that is, giving two sessions for private work and nine for the Health Service. Again, the bulk of his pay is already met by the taxpayer. In the hospital service, what is happening is that the insured person is merely getting a regular extra to which somebody else is equally entitled, but which he cannot pay for out of his own pocket——

8.45 p.m.

Sir George Sinclair: Is the hon. Member trying to suggest that members of B.U.P.A. who receive this service are not already paying for the free services which he has cited as part of the Health Service?

Mr. Pavitt: That is precisely the opposite. I think that this was made clear. This service is not free. We all pay for it. It is free only at time of illness, but we all pay £1,000 million a year to provide it.
A person with B.U.P.A. is paying a second premium for a convenience. If he has a medical need, as he has already paid for the service, he can have it. Any qualified doctor, whether a consultant in a hospital, a registrar or a general practitioner will give medical care to a person who needs it, irrespective of whether or not he is insured. To say that they would act otherwise would be an insult to the medical profession.
All the B.U.P.A. person is doing is providing some convenience. Here, I have some sympathy with women, because the longest waiting list, as the right hon. Member for Reigate (Sir J. Vaughan-Morgan) will know, as Chairman of the Westminster Hospital, is for gynaecological treatment. The difficulty is that the medical needs between two

ladies who need gynaecological treatment may be precisely the same, because no woman will die from it, but will have six months of acute discomfort because of having to wait. If a woman has some other means of paying, she can get into a bed six months earlier than someone with precisely the same discomfort, but who has not the money to pay the premiums to B.U.P.A. to provide for this need.
This kind of organisation can be used as a means of jumping the queue. In relation to the general practitioner, the position is even worse. He is in the Health Service and is one of 23,000 general practitioners with an average of 2,300 patients each and a maximum of 3,500. If we got to the stage where it was possible to save time through some sort of "opting-out" scheme, we would rapidly reach a situation in which a person would decide that it was easier to opt out so as to be able to go in through the front door and save an hour and a half waiting, perhaps in a crowded surgery, rather than go through the normal machinery.
Of course, the point which the hon. Member for Farnham made and which was similar to a point which I made on an Amendment 24 hours ago, on a different Clause, is that there is a strong need for ancillary services so that G.P.s' time may be used more effectively. The services to the nation of my right hon. Friend the Minister of Health are underestimated. He did tremendous things over the last 12 months when 17,000 doctors in February last year were prepared to resign. This would have made the seamen's strike look like child's play had it happened, yet no resignations have taken place.
The essential thing about the settlement was that it helped to provide the ancillary services which are part and parcel of the B.M.A.s agreement with the Minister. I hope that this point about ancillary services will be covered in the coming months. At present, and in the interim period, the danger is that if one is able to command the doctor's time because he is short of it, he is definitely encouraged to give the worst possible care to non-paying patients. If one has to wait for an hour——

Hon. Members: No.

Mr. Pavitt: I am saying that there is a cash incentive. No doctor would do this—[AN HON. MEMBER: "Why say so, then?"] There is a cash incentive which might mean that the service which patients get through the surgery lasts a little longer than what they would get if they paid. The College of General Practitioners is giving encouragement to efforts to see that patients have decent waiting-rooms and comfortable conditions. This has been one of the problems of the pool system.
The incentive in the previous system of payment was that the more the doctor paid to help his patients, the more he had to pay out of his own pocket. One of the great advantages of the new system will be that that will no longer happen. It will be made even more redundant if there is any idea of paying for B.U.P.A. or some other insurance scheme. Apart from the very cogent reasons which I am sure the Treasury Bench can put forward, I hope that for health reasons the Government will reject this proposal.

Mr. R. H. Turton: I am surprised at the hon. Member for Willesden, West (Mr. Pavitt). I heard him last night advocating a special dispensation for co-operative societies because of the advantages they give. This Clause deals with a form of co-operative society, but he is attacking it as venomously as he warmly advocated his own Amendment.
We are in the difficulty that we are discussing what, clearly, is a matter on which only a certain number of people in Government Departments have any close knowledge. That is the administration of the Ministry of Health. As one who held the office of Minister of Health, I think it a great pity that there is no one on the Government Front Bench who represents the Ministry and can advise the Chief Secretary on these problems. I ask that when we are discussing Amendments which affect a Ministry as directly as this does there should be a representative of that Ministry on the Government Front Bench.
T shall try to deal with the arguments of the hon. Member for Willesden, West. He said that the B.U.P.A. was using something without payment for which the rest of the taxpayers have paid. That

was the first limb of his argument and it is absolutely untrue. A great many of the B.U.P.A. hospitals have nothing to do with Health Service hospitals. There is a B.U.P.A. nursing home. As an analogy, we can consider Manor House Hospital. When I was Minister I thought it one of the glories of our Health Service system that we had a hospital outside the Service to which the trade unions had contributed co-operatively and which would provide an additional source of help. That is what B.U.P.A. is doing.
I want to see this insurance for hospital treatment spread far wider. I always wonder at the very small amount of the gross national product divided among Ministers which can be devoted to health. If the country is to have a satisfactory Health Service we have to devote a far greater proportion of the gross national product to health. The only way to do that is to take the example of the trade unions and B.U.P.A. and encourage more people to make their own provision for hospital treatment.
The second limb of the attack by the hon. Member for Willesden, West was his contention that B.U.P.A. patients were using beds which were paid for by the rest of the community. That, I am sure, the hon. Member, for whom I have the highest regard, would wish to reconsider.

Mr. Pavitt: Will the right hon. Member say just how many B.U.P.A. beds have been provided distinctly and absolutely separately from the beds it uses in the Health Service?

Mr. Turton: B.U.P.A. is building a series of nursing homes throughout the country. This is a project which is in its infancy, rather like the building programme of the present Minister of Health. It will certainly take time, but the hon. Member knows that such projects do take time. Over the last three years, three or four B.U.P.A. nursing homes have been built and the programme is going forward. Just outside my constituency there is the kind of nursing home used by B.U.P.A. patients. It has nothing to do with the Health Service; it receives no money from the Minister of Health; it is provided for by the private patients, principally with B.U.P.A.

Mr. Bernard Braine: And it reduces the pressure on the hospitals.

Mr. Turton: I was trying to quote the argument of the hon. Gentleman the Member for Willesden, West that B.U.P.A. patients were using beds paid for by the rest of the community. He must know that this is completely untrue, because a B.U.P.A. patient is using a private bed.
The cost of a private bed is worked out to include not only the services in the hospital, but the overall cost of operating many other things. When I was Minister of Health I felt that we were making a mistake in making the private bed costs so high, because we were taking into consideration every possible eventuality. No one can say that a B.U.P.A. patient is getting any advantage which is being paid for by anyone else. He is paying the full cost, more than the cost.
If we are to get a better Hospital and Health Service we have to widen our horizons beyond the present limited Government action by which we penalise, through taxation, all those who make provision outside of the Health Service. In the years to come, now that we have a much more affluent society, more people will be making their own contracts for something over and above the Health Service. I am as keen as anyone in this Committee to see that the hospital service is as good as any in the world, and we have to have more and more of the Treasury's money for the development of the service.
I am quite satisfied that it will not be enough and one has therefore to encourage people, not merely those who have a great deal of money, but all people, to try to go in for schemes such as B.U.P.A. The hon. Gentleman the Member for Willesden, West told us that gynaecology cases had the longest waiting list. I am quite sure that he is wrong. I should have said that the E.N.T. waiting list was far longer than the "gyny". My right hon. Friend the Member for Reigate (Sir John Vaughan-Morgan), who has far more knowledge of this than I have, has said that there are certain universal diseases which have an even longer waiting list.
The pressure on the waiting list is tremendous, and if one is to make a success of the Health Service, more accommodation has to be provided. If the hon. Gentleman the Member for

Willesden, West thinks that he can persuade the Treasury to grant his right hon. Friend the Minister of Health sufficient money so as to end those waiting lists in my lifetime, or even in his, I should be happy or even surprised.

Mr. Pavitt: It is my constant endeavour.

9.0 p.m.

Mr. Turton: I have watched the hon. Gentleman in friendly appraisal for some time, but his constant endeavours have not had any success.

Mr. Braine: Would my right hon. Friend acknowledge that under present arrangements the number of doctors in relation to population is tending to fall, not because of emigration, but because fewer doctors in relation to the increased population are coming in? Unless some steps are taken to increase the total resources going into expenditure on health, the prospects for giving the people a decent Health Service are remote.

Mr. Turton: That is true. There is not only the problem of the ratio of doctors to members of the population. I have had personal knowledge of this matter. When one is fighting battles for health and hospitals in the Cabinet, one has many other claims to deal with. I thought that the most successful Minister in dealing with these claims was my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), who produced the 10-year building programme. Since then, we have gone back.
There is no argument in morality or justice in penalising a person who makes his own medical provision. This Clause would encourage people to make their own provision and would get a new type of subscriber to B.U.P.A., which I should like to see become a universal organisation, so that emergency cases could go to a central hospital of the Health Service quickly. But if it is a matter of choice, as with an E.N.T. case or with somebody with a hernia, or piles, by his subscription to B.U.P.A. he will be able to get early treatment in one of its homes at no cost to the State. This would encourage the medical profession and would take a great load off the Health Service and would be for the financial benefit of the Treasury.
Those in the Treasury have hearts, and they must be worried about the shrinking proportion of the gross national product being devoted to hospitals and health. Somehow we have to deal with this problem. The only way to deal it is by blending private enterprise with the National Health Service. I agree that the best service must be available for the urgent cases. We have to make better provision. Many people are not satisfied with the long waits in the out-patients department, or the long queues of E.N.T. cases waiting to be dealt with in hospitals. Many people in all income groups and occupations prefer privacy in hospital. This must be provided for.
The B.U.P.A. idea is good. Abroad, in both Germany and Latin America, employers and trade unions are doing this very thing with hospitals. This is why I resented the jeers of the hon. Member for Willesden, West. In Latin America, hospitals are provided by the unions of the employed and by the employers' association.
The best hospitals I encountered when I was touring Germany and Berlin were provided by the Federation of Employers. That is what I want to see in this country if we are to have a really fine Health Service in future. That is why I hope that the Chief Secretary will not pay much attention to the unsound bickering of the hon. Member for Willesden, West but will grant this Clause a Second reading.

Sir John Vaughan-Morgan: I must apologise to my hon. Friend the Member for Farnham (Mr. Maurice Macmillan) for not being present to hear his exposition of the case. I am sure that it was a very good one. It was not my intention to take part in the debate, but I was prompted to do so by the remarks of the hon. Member for Willesden, West (Mr. Pavitt)—whom, I gather, I have driven from the Chamber by the mere threat that I might refer to his remarks. Those of use who, like my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) have had the honour of serving in the Ministry of Health or have had some association with the National Health Service, must also resent the argument behind the hon. Member for Willesden, West's attitude.
I share my right hon. Friend's regret that there is no representative of the

Ministry of Health here—not even a P.P.S.—who might have listened to the arguments and at least reported them to the Minister. I am afraid that, although I feel that the Chief Secretary will be able to deal adequately with the reasons from the Treasury point of view why the present situation will not allow this concession to be made, I had hoped that he might have someone at his elbow able to give him some argument from the health point of view.
The hon. Member for Willesden, West—I see that he is back, and I am so glad—started his argument, which I believe that I interpret fairly, by saying that the subscriber to B.U.P.A. had taken all the services of a doctor whose education, costing nearly £7,500, had been paid for by the State. He suggested that therefore the subscriber was receiving, so to speak, uncovenanted benefit from the State.
This applies to almost anything else where education has been provided by the State. Indeed, it applies to the whole community. It is a ridiculous argument. If one wants good 100 per cent. Socialism on those lines, the only logical end to the hon. Gentleman's argument is the abolition of private practice and of private beds in all hospitals. This is a tenable theory, though inhuman and dreary, and it would ruin medicine. Is that the hon. Gentleman's demand?
Mr. Pavitt: I must apologise to the right hon. Gentleman. If this could develop into a debate on the National Health Service I would dearly like to take this up with him. I am prepared to debate at any time with him all the points he is making. What the right hon. Gentleman is seeking to do is to use a preferential call on part of the doctor's time for those people who can pay while the people needing his services on medical and clinical grounds have to wait, as the hon. Member for Essex, South-East (Mr. Braine) pointed out, in the queue.

Sir J. Vaughan-Morgan: The logic of the hon. Gentleman's argument is the abolition of private practice, which would be disastrous. I share the view that, far from destroying private practice and abolishing paybeds, we should find a reasonable place for them in the National Health Service—a private sector as opposed to the public sector.
I cannot share the view that this is done at the expense of the public. The hon. Member for Willesden, West suggested that section 5 beds were filled by people who were queue jumping. As the hon. Gentleman knows, the Minister of Health is now having a review of the number of pay beds, but I would be very surprised indeed if, at the end of that review, he decided to do anything about the matter, because, as the hon. Gentleman knows as well as I do, queue jumping amounts to nothing. The queue jumping is in the Manor House Hospital outside the Health Service and not inside the Health Service where it is absolutely minimal. If it were abolished altogether, that would not reduce the important waiting lists by any effective margin.
But it would start to destroy private practice. The hon. Gentleman might say that that was a good thing, but to me it will be a tragedy when the day comes when private practice is abolished. Those who know consultants will know that there is some merit in their hearing what might be called critical voices. In a teaching hospital, the paying sector cannot be disentangled from the other and I do not believe that the patient gets any better service from the consultant by paying for it. I am certain that that is the reverse of the consultants' attitude. But it is a very good thing for the consultants sometimes to have people who argue with them.

Mr. Pavitt: The right hon. Gentleman is the Chairman of Westminster Hospital and should know that private patients' papers are given special markings in order that these patients can go more quickly through the radiography department.

Sir J. Vaughan-Morgan: If the hon. Gentleman will give me an official note of that, I will look at it, but I doubt whether it affects the service. As he knows, there is a great shortage of radiographers, but if there is any deterioration in the service, I would say that it applied to both kinds of patient. But that is not relevant to the argument, because everything the hon. Gentleman is saying applies to Manor House, which is outside the service. I cannot see why he should allow that and not allow private beds in the teaching hospitals. The present small

sector of private practice should be encouraged for it is to the good of the Health Service as a whole that it should be fostered and should prosper.

9.15 p.m.

Sir G. Sinclair: I was deeply shocked by the speech of the hon. Member for Willesden, West (Mr. Pavitt). It is abundantly clear that he would like to see B.U.P.A. wiped out completely. I hope that he and his Socialist colleagues who dislike anything in the medical world being outside the National Health Service will not persuade their Front Bench into taking a similar attitude towards an organisation which is now bringing tremendous and widespread additional benefits to the people of this country.
My hon. Friend the Member for Farnham (Mr. Maurice Macmillan) said that there were already more than I million people subscribing to B.U.P.A. They are not confined to any one income grade. The subscriptions to B.U.P.A. are not very great if they are reckoned out in terms of cigarette money. They are an enormous insurance to families at times of stress and anxiety. More and more families are deciding to use part of their earnings—not a great part, but an important part—to provide facilities in medicine additional to those provided by State medicine.
Will the Government Front Bench stand against this tide of family initiative? This is family initiative deciding to get additional facilities for their own members by paying something out of their earnings, payments well within the capacity of even the lowest earning groups. To provide these extra facilities, to get extra nursing homes built, to attract nursing and medical attention into those homes, is a great additional service to the country. This is what the people themselves are choosing because they are worried by the inadequacies of the Health Service to meet their current needs. This is their own initiative. Why should people stamp on it?
Surely what the country needs is more channels for effective initiative and self-reliance, and B.U.P.A. is one of the finest examples of this that we have today. It is a success story, it is meeting needs, and it is showing the way for the rest of the country. This is what accounts for the fact that there are 1 million subscribers.
This is what accounts for the fact that the membership is rising by roughly 10 per cent. per year. This is a significant social fact. This is the community putting more of its money into something that it wants over and above what the State is prepared to do for it.
I ask the Government spokesman who is to reply to the debate not to stand in the way of something which is becoming more and more broadly based, which is meeting a real need felt by mothers and fathers in families, and which is being appreciated by their elder children as they themselves take on responsibilities. This would be a very dangerous thing to do.
There is an opportunity tonight for the Government to show that on a matter like this, which has the real feeling of the country behind it, they will not be bigoted but will encourage something which is already helping to spread the services of which this country is really greatly in need.

Mr. Diamond: The reason why I rise, having listened very carefully indeed to every speech which has been made and recognising that there are other hon. Members who wish to contribute to the debate is that we are having, under your very wise guidance, Mr. Irvine, a wide debate which started with the hon. Member for Farnham (Mr. Maurice Macmillan) dealing in the clearest language with an Income Tax proposal, which was developed by my hon. Friend the Member for Willesden, West (Mr. Pavitt) into the relationship betwen tax and the Health Service, and which was taken up at that point and dealt with by a number of right hon. and hon. Members on the Health Service. Although I have listened with the greatest care, as I always do, and with the greatest interest to what right hon. and hon. Members said, I have not heard the word "tax" for a very long time. Therefore, perhaps it would not be inappropriate for me to give an indication of the Government's attitude on this new Clause dealing with tax.
Can I first clear the ground a little by saying that what the Government are not doing—I am addressing myself to the hon. Member for Dorking (Sir G. Sinclair)—is standing in anybody's way. What the Government are not accepting is a pro-

posal, not a very logical one, by two right hon. Members and supported by several hon. Members, to reduce the amount of money available for the National Health Services. Although they most sincerely want to promote the cause of the National Health Service and recognise, they say, that the National Health Service could well do with further public funds, they nevertheless support an Amendment which would reduce the availability of public funds for the National Health Service and every other kind of public expenditure. That is the logic of what they have said and we cannot accept that logic.
I turn to the essential proposal of the hon. Member for Farnham, who explained the present provision of life assurance relief with complete accuracy. He went on to explain what the associations, for which the new Clause pleads, do. He said that there was a large and growing demand for the services of B.U.P.A. and similar organisations. They were growing at the rate of 10 per cent. per annum, he said. His hon. Friend the Member for Dorking, who spoke with obvious direct knowledge, said that the payments made by contributors were well within the contributors' capacity to pay.
There is a series of organisations which are serving a large and growing demand, growing at the rate of 10 per cent. a year, which exist on payments well within the capacity of the contributors to pay them. I am bound to ask, therefore, "Why is everybody coming to me at the Treasury to ask for some money for these services when they are perfectly capable of looking after themselves?" At the moment I am being neutral about whether the Government should help or hinder the development of these services.
So far the argument has exclusively demonstrated that, whatever else one wants to say about these services, one cannot say that they are in need of public assistance—Treasury help. I accept what hon. Gentlemen opposite have said on this score and, therefore, one must look for entirely different arguments before the new Clause can be said to have been given a footing at all.

Sir G. Sinclair: It is the imposition of the new tax, of this new burden, on these services to which everybody is objecting.
It is not a question of giving a dole but of not imposing an extra burden on something which is providing extremely good services to the country.

Mr. Diamond: I am prepared to deal with any argument, but the hon. Gentleman will not mind my saying that that leg of the argument was not adduced earlier in discussing this new Clause but relates to an earlier debate. The hon. Member for Dorking is now pleading on the grounds of removing a burden and is talking about S.E.T. He is saying that this burden should not be placed on organisations of this kind. I can only repeat what my hon. and learned Friend the Financial Secretary said yesterday when dealing with Amendment No. 73.
My hon. and learned Friend made it clear that there was no burden which could not be borne most readily and, in adducing that argument, he spoke of the case of the payment of S.E.T. amounting to £12,000 a year which resulted, in effect, in an additional 8d. per contributor per year to cover the cost of S.E.T. which, the hon. Member for Dorking is saying, is a burden which should be removed from these organisations. Thus, to cover the cost of S.E.T., each contributor would have to pay 8d. a year more.
The figures produced by the hon. Member for Farnham showed that S.E.T. would result in a 3· 7 per cent. increase in wages and salaries of the organisations about which he spoke. That is a very likely figure. With wages amounting to 9 per cent. of the total costs and services provided, the tax, therefore, represents 3· 7 per cent. of 9 per cent., or approximately one-third of 1 per cent., which is the sort of figure which would be expected.
On the question of hardship which the hon. Member for Dorking now puts up, the figures produced by the hon. Member for Farnham indicate that Selective Employment Tax represents for the organisation one-third of 1 per cent. of its charges. A £12,000 tax payment in the case of a similar organisation represents an additional contribution of 8d. per member.

Mr. Maurice Macmillan: To say that the Selective Employment Tax puts a

burden of 3· 7 per cent. on the wages and salaries, which represent 9· 1 per cent., is a slight distortion, in that 88· 9 per cent. of subscriptions is paid out. The 9· 1 per cent. represents the administrative cost of running an insurance scheme, and it cannot be described as the ordinary cost of providing a physical service. It is the administrative cost of an insurance scheme to which I was referring, and not the running cost of the organisation which is run as a subsidiary activity.

Mr. Diamond: One does not know that the subsidiary activity bears an additional penny because of Selective Employment Tax. One does not know the form of subsidiary activity to which the hon. Gentleman is referring. If it is a charity, it does not bear one penny of Selective Employment Tax.

Mr. Maurice Macmillan: It is a charity.

Mr. Diamond: Then it does not pay one penny of Selective Employment Tax. I was putting the figures accurately before the Committee and saying that the additional amount which the hon. Member for Dorking is now pleading on the grounds of hardship is 3· 7 per cent. of 9 per cent., or one-third of 1 per cent. In terms of a similar organisation, it represents an additional 8d. per member. The hon. Gentleman cannot say that, because of Selective Employment Tax, which we are not debating, there is a burden——

Mr. Braine: Would the right hon. Gentleman address himself to the argument which formed the basis of most of the speeches during the debate? The Health Service, which we all value and wish to see improved, has been in a state of crisis for some years and will be for some years ahead. It has been starved of an adequate share of the national resources, and it is clear under the National Plan that it will get a smaller share of increasing national resources than is probably necessary. If that is so and B.U.P.A. is a means of attracting additional resources to health in the country, do the Government favour or disfavour it? Would they give encouragement to B.U.P.A., or discouragement? That is what the debate is about.

Mr. Diamond: Perhaps I may be allowed to come to that point. I was


trying to clear up some of the outside or tangential arguments which had been produced and which I thought did not touch the heart of the matter.

Mr. Braine: We hope to melt the right hon. Gentleman's heart.

Mr. Diamond: What we are discussing is not the proportion of public expenditure which is allocated to the National Health Service. As Chief Secretary, I should be more than delighted to participate in a debate of that kind, when it is before us. What we are discussing is whether a case has been made for an Income Tax allowance of the kind described in the Amendment.
9.30 p.m.
For this purpose, as Chief Secretary to the Treasury, leading with a new Clause on a Finance Bill, I am neutral to all questions of whether I want to encourage or discourage B.U.P.A. and similar organisations. The matter does not arise. I do not have to address my mind to that question. My right hon. Friend the Minister of Health might have to if there were a debate on this issue relating to the Health Service. All that I have to address my mind to is the question, has a case been made for departing from our previous practice, so far as Income Tax allowances are concerned, so as to give an allowance of this kind, namely, Income Tax relief in respect of payments to contractual medical treatment insurance schemes?
There are a whole host of activities which are carried on in this country which are commendable and to which everyone would pay respect and lip-service, but to which I, as Chief Secretary to the Treasury, am not required to subscribe out of the taxes which I collect from every right hon. and hon. Member of this Committee. There are many others of which we could speak in less commendable terms, but this is irrelevant to my responsibility and what we are considering. We are considering whether there should be an Income Tax allowance, and I want to explain to the Committee why this Government share the view of the previous Government that no case has been made for giving an Income Tax allowance of this kind for these purposes.
I can explain it in one sentence. The whole fundamental principle of Income

Tax is involved. The whole basis of Income Tax is that each person is required to contribute on a fair basis out of his income a share of the tax or Surtax which is collected for public purposes, and, subject to the law of the country, to do what he wants to with the rest of his taxed income. It is the individual's money to do what he likes with it, and it is not the problem of the Inland Revenue to define what anybody should do with his money by giving an Income Tax allowance for it. It is within the discretion of every individual to use his own taxed income or capital resources for whatever purpose he chooses within the laws of the country. It has nothing to do with me.
The hon. Member for Farnham moved the new Clause with care and gave all the relevant facts, but there was nothing in his argument which touched on this basic principle. I do not have to be persuaded whether B.U.P.A. is good or bad. I am told that it is prospering. I am told that it does not need Treasury encouragement because it is prospering without it. I am told that it is no burden on its contributors, and I have demonstrated that S.E.T. is no burden on it, so there is no question of any hardship. The only question is, is it within our tax principles to allow a deduction from a person's tax liability of the subscription that he may choose to pay for this purpose?

Mr. Paul Dean: How does the right hon. Gentleman reconcile his argument with the tax relief for life assurance and for occupational pension schemes?

Mr. Diamond: If I am continually interrupted, I shall not be able to get to that part of the argument. I have listened carefully to the debate, and I have noted the points to be answered. There is a simple principle that out of taxed income a person pays for what he wants to pay, and that is the end of that one. This is one of the things for which people pay out of their taxed income.

Mr. John Hall: rose——

Mr. Diamond: What is the matter with Wycombe?

Mr. John Hall: Nothing, but I thank the right hon. Gentleman for giving way.
He says that he will deal with life assurance. Perhaps he will say why the Treasury does not decide whether it is good or bad to get married on taxed income. We get allowances for it nevertheless.

Mr. Diamond: I shall answer that, too. I should have thought that the hon. Member realised what the framework of tax allowances was. The purpose is to try to arrive not at what it costs a person to keep a wife, child or dependent relative, but to try to arrive at a graduation of the burden of taxation as a result of which those with heavy responsibilities pay less Income Tax and, as far as can be assured in this unjust world, pay a justly proportionate burden of Income Tax. That is what it is about, and that is why we do not fashion the allowances on what it costs to keep a wife—if the hon. Member for Finchley (Mrs. Thatcher) will forgive me for intimating that keeping a wife is a burden. Perhaps I should refer to the relative joys and responsibilities that family life brings.
So much for the major principle; I am asked how I reconcile this with life assurance relief and mortgage payments. [Interruption.] I hope that hon. Members opposite will contain themselves. Treasury Ministers sit on these benches for 14 hours on end listening with interest and pleasure to hon. Members opposite, including the occupants of the Front Bench opposite; indeed, if it were not for them the lives of Treasury Ministers would be infinitely duller. But since Treasury Ministers sit for 14 hours on end listening carefully to what everybody has to say, I submit that in return hon. Members should listen to Treasury Ministers for 14 minutes at a time.
I am asked how I reconcile this simple principle, which every Government have adopted, with the way in which we deal with the calculation of tax liability and the relief given in respect of life assurance. Life assurance relief is fairly logical, although not completely. But it has been in operation for a century, and anybody who wants to tamper with an allowance that has existed for a century is looking for real trouble. It is not wholly logical, but it is not illogical. Life assurance relief is an encouragement which the State gives to savings. It has nothing whatever

to do with insurance for a period, and with risks, including the risk of accident and ill-health.
One point in the speech of the hon. Member for Farnham completely confused me. Perhaps I misheard him, but I thought he said that on one occasion the Revenue had yielded to his persuasion or to his Ministerial views and had provided a tax concession for sickness. I am unaware of it.

Mr. Maurice Macmillan: I cannot remember which Finance Bill debate it was. It was a long time ago. But it was admitted that a case might be made out for such a concession. I did not intend to imply that a concession had been given, but an admission was made that it might be possible to make out a case, very much on the lines which the right hon. Gentleman is arguing with respect to life assurance.

Mr. Diamond: I am grateful to the hon. Member. He has completely cleared up the point.
In short, our taxation system does not and never has made allowance, for tax purposes, on payments of this kind. It has provided for over a century an encouragement to saving, and life assurance is one of the most prominent forms of saving. It has never provided an encouragement through tax allowances to any other kind of insurance.

Sir J. Vaughan-Morgan: The right hon. Gentleman has dealt very courteously and logically with the argument as regards life assurance. Would he now expand this to cover overdraft interest?

Mr. Diamond: Yes, because the hon. and gallant Member for Carshalton (Captain W. Elliot) asked me to deal with mortgage payments, and these and bank interest go together. Neither has anything to do with saving. They are what are called in the trade annual payments, charges on one's income. One pays tax on one's income, but in arriving at its size one deducts from the gross income charges on income, such as bank interest, payments under deed of covenant, and mortgage payments——

Mr. James Dance: And insurance payments.

Mr. Diamond: Insurance payments, I am sorry to tell the hon. Gentleman, are not charges on one's income. They never have been and they cannot be. There is no compulsion to pay them. There is no question of them being charges one can be sued for and have to pay. There is no question of that. I hope that I have made clear why the question of B.U.P.A. and similar organisations is a matter on which I can be absolutely neutral as a Treasury Minister, whatever my views may be. If I were speaking in an entirely different debate I could make a speech about quality of life with which my hon. Friend the Member for Willesden, West would be in 100 per cent. agreement. But at the moment I am concerned with demonstrating that this is a tax principle which has never been breached and it is perfectly consistent with the encouragement that is given for saving.
When we last considered this matter in 1962 the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) resisted an Amendment that was not identical but was very similar. It was right to do so then, and it is right now. I cannot recommend to the Committee that this new Clause should be accepted.

Mr. Michael Alison: I thought that there was a smile on the face of the Treasury tiger as the debate became more and more involved in health matters. There he was, lurking in the long grass, waiting to spring out, and he has done just what was expected. He has pawed away all hope for a reasonable and desirable concession, on the basis of his almost aggressive exposition of the pristine purity of Income Tax law which cannot be breached.
Let me remind him of the one or two breaches which already exist, one or two chinks in the armour. He dealt with mortgage payments and life assurance, but what about the allowance which is made, under the Income Tax Act, 1952, of up to £70 to cover the cost of reports, replacements of Halsbury's Law of England for judges, the binding of the same, the maintenance of the same, and a private libary? Or what about the allowance which is made by concession in respect of the performance of judicial functions, as in the case of Her Majesty's judges, to maintain a study at a private residence?

Mr. Diamond: The hon. Member is making my case for me far better than I could.

Mr. Alison: I shall go on doing so. I think that the Chief Secretary will find that it may turn round and hit him. What about the allowance which is made to journalists to supply themselves with essential reference books? This is a tax allowance which is commonly admitted. What about the annual subscription to professional bodies which can be made an allowance against tax where it is relevant to the occupation of the person who receives the allowance? One could go on indefinitely. What about postage and stationery? What about the allowance to the clergy in respect of domestic service?

9.45 p.m.

Mr. F. A. Burden: What about the allowance granted to businessmen for membership of clubs considered essential for their business?

Mr. Alison: The Chief Secretary is trying to dominate, blind and overwhelm us with the monolithic structure of our allegedly invincible Income Tax law. The job of this Committee is to shoot all the weapons it can at that monolithic structure and breach it. This is what the Committee is meant to do, to humanise, change, reform and improve.
The right hon. Gentleman talks about the absence of any need to help the B.U.P.A. because it has grown by 10 per cent. a year. Perhaps he has forgotten that, under another piece of legislation with which the Government are concerned, the Treasury is prepared to throw taxpayers' money, at the rate of 20 per cent. in non-development areas and 40 per cent. in development areas, after manufacturing industry which showed a similar rate of growth, a 9 per cent. increase in investment, in the year 1965. It still qualifies for a huge Treasury grant, in spite of that growth. Perhaps the right hon. Gentleman has forgotten that, under the Industrial Development Bill, the Chancellor is to pour taxpayers' money into one of the most profitable undertakings in the country, Imeprial Chemical Industries, if it happens to invest in qualifying plant and equipment.
It is no use saying that, because B.U.P.A. happens to be growing, it does


not need assistance and it ought not to have any. If expansion in the public interest can be demonstrated in the case of manufacturing industry, the Government are perfectly prepared to throw taxpayers' money after it in order to help it to grow. All we suggest—the health case has been put irrefutably—is that our health services should expand, and be helped to do so, at least as rapidly as manufacturing industry should expand. What is the use of expanding manufacturing industry, with enormous Treasury grants based upon payments from the taxpayer, if the human assets, the human agencies which operate the plant and machinery, are neglected. All we suggest is that the Treasury should take a rational step in this direction. Let them use some of the taxpayers' money in order to increase growth in the health services. It goes hand in hand with plant and machinery.
The right hon. Gentleman cannot convince us by arguing the allegedly monolithic structure of our Income Tax law. It has already been breached in so many particulars. It is so irrational. There is no point in saying that it is a hundred years old and, therefore, only those aspects of our Income Tax law which have lasted for a certain period can be altered. Look at what the Government have been introducing in 1965 and 1966, without any hesitation or respect for precedent.
It is quite clear that the health services should be allowed to expand, with encouragement to the private sector, at least as rapidly as private manufacturing industry towards which the Treasury, apparently, feels quite differently, having no hesitation in dipping into the public purse. We have put a thoroughly rational and irrefutable case for investment in human beings as well as investment in plant and machinery. In fact, the rate of growth is far lower in the National Health Service than it is in the other sectors which the Treasury is prepared to encourage.
Let the right hon. Gentleman look at some of the reliefs which are admissible under Schedule E and remind himself of the anomalies and exceptions which have grown up over the years. Let him take a sensible step and introduce into our law a tax concession which

really makes sense in the present situation and which would get to grips with one of our basic problems. I have reminded him that the judges are allowed concessions for robes, wigs and private studies, the clergy have their concessions for studies, domestic servants, and the rest, the journalists have their concessions for books essential to their trade, when they could easily get them at the public library, being ratepayers like everyone else. These concessions already exist, and the example should be followed through by acceptance of this new Clause.

Mr. Patrick Jenkin: Would my hon. Friend care to put to the Chief Secretary the best possible analogy, the allowance made for contributions under a superannuation scheme or pension scheme under Section 379 of the Income Tax Act, 1952?

Mr. Alison: I am sure that the Chief Secretary has registered that.
The right hon. Gentleman has referred to the pleasure which he gets from sitting on the Treasury Bench and listening to the argument. If he takes his own words seriously and has listened to the arguments—as, I agree, he has done patiently—and has, on his own admission, been softened by the presence of my hon. Friend the Member for Finchley (Mrs. Thatcher) sitting opposite him, let him add to all this a little commonsense and give us our new Clause, and the whole country will be better off.

Mr. Robert Cooke: I got the impression from the length of the Chief Secretary's speech and the involvement of it that he probably had a rather poor case and that was why it had to go on so long and had so many ramifications. I put it to the right hon. Gentleman that this is a different century and that perhaps a few new ideas from even the present Government might be acceptable to the Committee. That is why I rise to support the new Clause.
We got the impression from the Chief Secretary's speech that, somehow, all the money belonged to the Revenue and it would be almost immoral for the taxpayer to direct it into a certain field of his choice. If the tax concession is not to be given to people who want to subscribe to B.U.P.A., they could easily prevent


the money from getting into the Chancellor's clutches by giving it to a dogs' home. Surely the right hon. Gentleman would not wish to prevent people spending it on perhaps a more worthy cause than the dogs' home—[An HON. MEMBER: "What is wrong with the dogs' home?"]—which seems to be fairly adequately subscribed for already.
I knew that somebody would say, "What is the matter with the dogs' home?" I do not think that there is much the matter with it. That is why I object to people pouring money into dogs' homes when they might well spend it on something like B.U.P.A., which would probably do them more good in the end.
Money is the key to many of the things that we would like to do and to much of the good that we would like to do. It is not much good the Chief Secretary saying that the cost to this or that organisation would be only £12,000, or 8d., or so many cigarettes per person per week. Think how much good could be done with the extra £12,000 which the Revenue would not claw back. That is a worth-while thought.
We had a formidable team ranged on this side of the Committee, including three former Ministers of Health, two former Parliamentary Secretaries, a host of former Parliamentary Private Secretaries and the chairman of one of London's great hospitals, all people with wide experience. The Treasury Bench merely offers a lot of experts on taxation and cold calculations. We are talking about human beings.
I have been concerned with the medical profession all my life. My father is a surgeon, my mother a highly qualified medical practitioner and one of my grandfathers a doctor. In my constituency I have the finest and largest teaching hospital in the West of England, a host of other hospitals, a private nursing home administered by the Nuffield Trust and another run by the Roman Catholics. I therefore have a real interest in the provisions of the Clause.
I might also say that as far as I can find out the members of my family who trained to become members of the profession did not receive any State aid on the lines suggested by the hon. Member for Willesden, West (Mr. Pavitt). Indeed, many people who are practising

today got there by their own hard exertions and the hard-won savings of their families. It is a futile, feeble and niggling argument to bring out the cost of training a doctor in modern times as though somehow this is all being misused by people who subscribe to B.U.P.A.
I do not want to go in detail over all the niggling speeches which I have heard from the hon. Member for Willesden, West during the years I have sat opposite him in the House, but I wish that he would look at some of the broader principles. That is what the Clause is about.
The hon. Member said something about waiting lists and that it was a terrible thing that, if the new Clause was accepted, B.U.P.A. would go on defeating the fairest way of clearing the waiting list. If however, we were to provide the facilities in the Health Service for clearing the waiting list, as soon as the list had been cleared there would be a whole lot of surplus facilities, which would be an utterly wasteful procedure. That is worth thinking about.
In the case of the consultants on the nine-elevenths basis, the hon. Member for Willesden, West again got it wrong in saying that the bulk of their pay came from the Health Service. Many people who give splendid service to the Health Service get a substantial part—indeed, the majority—of their income from private fees outside it.
The other argument deployed about the waiting list—this is where B.U.P.A. is being attacked whereas it should be helped—is the suggestion that, somehow, there would be circumvention of the waiting list in an immoral fashion through belonging to the scheme. We have heard the phrase, "Time is money". What is wrong with someone who is busy, to whom time is immensely valuable, paying for the privilege to save some of that time and use it more fruitfully rather than in a waiting room? Some other people who have to wait a longer time have less to do with their time. Many people enjoy sitting in a doctor's waiting-room and find it a most interesting——

Mr. Eric Lubbock: On a point of order. This is most ghastly drivel. I wonder, Sir Eric, whether we could send for the Government Deputy Chief Whip?

The Chairman: That is not a point of order.

Mr. Cooke: I am glad of your support, Sir Eric. Of course, the Committee realises that that is not a point of order. The hon. Member for Orpington (Mr. Lubbock), not having been in the Chamber for most of this debate, would hardly realise what it was all about.
The thing that all of us have been most keen about is that we want to see a greater partnership between private enterprise activities and the State. Hon. Members opposite want to stop private enterprise health activities and the State to take over the lot. How much happier we would be if everyone were in a position to help himself and the State did not have to interfere in people's lives and everyone belonged to some kind of B.U.P.A. organisation. Let people provide their own facilities if they can; that would make for a happy society.

Mr. Dean: Rarely have I heard more disappointing and weaker arguments from the Chief Secretary than we heard from him a few moments ago. I hope that before this debate is over he will try to do better.
One of the first points he made in his speech was, why are these schemes coming to the Government for public assistance? To equate with public assistance people who are insuring themselves against ill-health and are taking up contracts thereby and merely asking for tax recognition of this is a most extraordinary notion. I shall return to the arguments by which the right hon. Gentleman tried to convey that there was a fundamental distinction between life assurance and insurance of this kind.
I support this Clause on broad grounds of principle. I think that it will be agreed on both sides of the Committee that there are three things which are basic to the British character: the first is the love of freedom and independence; the second is self-reliance; and the third is thrift. In spite of some evidence to the contrary, these things are still strong in our country, but they need to be encouraged and fostered. There is a danger, if we are not careful and if we attempt to offer the mother's milk of the Welfare State to everybody in all circumstances, that we shall end by making perpetual children of

the British people. This is the broad ground of principle on which I support this Clause.
I turn to some practical points. These are all strictly relevant to the effect that this will have on the Exchequer, and to the finances of the National Health Service. The first practical reason is personal choice. As our society becomes more prosperous, people are becoming better able and more willing to provide for themselves. The abundance of consumer goods to choose from is there to see—cars, television sets, food and the like. No one but a few busybodies would attempt to dictate our personal choice in these goods, yet in things which are absolutely basic to the quality of life, such as health, the choice is very restricted, and, as is quite clear from the speech of the Chief Secretary, this choice is frowned upon by him.
10.0 p.m.
This is a bad mistake from the point of view of our economy and the locking-in of our tax arrangements with our social service benefits. I believe that, equally important, it is contrary to the trend which is growing more powerful every day, of people desiring to provide more for themselves. The survey, "Choice and Welfare", published in 1965, proves this point very clearly.
The figures which my hon. Friend the Member for Farnham (Mr. Maurice Mac-millan) gave about the growth of B.U.P.A. and similar centres shows quite clearly that the demand for this type of self-help is growing not only among the comparatively small section of the community in the higher-income brackets, but among all sections of the community. It is also growing among group schemes, where employers assist their employees to obtain cover.
The second practical argument, and this should appeal to the right hon. Gentleman, is that we are constantly being told by him and other Treasury Ministers that we are spending too much on consumer goods, on trivialities, and that the pressure on demand is too great. The Chief Secretary is perfectly right in telling us these things. If this is true, why is it so? One of the reasons is that we are not sufficiently encouraged to spend our money on things which are basic to the quality of life. In the case


of medical insurance policies there is no tax relief for independent subscribers, and we tend to be accused by the party opposite of queue-jumping, trying to get a better standard of service than the rest of the community. Expenditure in this direction can help to relieve the State services and public money. The more we are encouraged to take out policies of this kind the less likely we are to spend on what the party opposite likes to call "candyfloss".
The third practical point which is directly relevant to the responsibilities of the Treasury is the shortage of resources for the State services. No one can deny that the Health Service, and local health services are short of money, and of doctors and nurses. Hardly a day goes by without some hon. Member drawing attention to accommodation in the Health Service, to shortages and to needs which are inadequately met.
The inevitable answer from the Ministers, and one appreciates that it must be so, is, "We are doing our best, but resources are limited". The National Plan proves this quite clearly. According to the plan we shall be spending in 1970 a smaller proportion of our national resources on health services than we are spending now. Here, then, is a chance for these private groups to help fill a gap which the National Plan clearly foreshadowed.
This point was immensely well put in the survey I mentioned earlier, "Choice in Welfare". It said:
In 1965, despite the brave hopes of future economic growth, the Government has felt compelled to hold back expenditure on welfare development which Ministers clearly think highly desirable. Such decisions are dictated by the harsh logic of tax resources confronting ever-growing clamour for Government expenditure on roads, police, administration and foreign aid. The more convincing logic of rising increases and growing preferences for choice in welfare confirms the alternative possibility of turning away from almost exclusive reliance on taxation and attracting more voluntary expenditure into education, health and pensions by encouraging growing numbers to divert a larger proportion of their rising incomes into improved welfare services of their choice.
This quotation is very appropriate in making the case for the shortage of resources.
We shall never help the casualties of our society properly if we insist on regard-

ing everybody as casualties. We cannot help the weak effectively unless we encourage the strong. This is not a plea—I say this particularly to the hon. Member for Willesden, West—for the dismantling of the Health Service. It is a plea for welcoming private health services as part of this, so that the Health Service can concentrate more on the job which only it can do effectively.
Finally, I come to the arguments of the Chief Secretary. The first dealt with costs. We do not propose that people who take out medical insurance policies should be able to contract out of their Health Service contributions or their contributions to the general taxation which provides the bulk of the finances for the Health Service. These will remain unaltered. There will be no loss of revenue in either of these respects.
Further, we do not propose that people should present doctored bills and get relief. All we propose is that they should get relief towards the contributions they make to genuine medical insurance schemes. One of the right hon. Gentleman's arguments was that there is no tax relief in respect of this type of insurance. But if this is the case, how does he explain that, where there are group schemes and the employer pays a part or whole of the group or other contribution, he gets tax relief on that?
I hope that, before the debate ends, the right hon. Gentleman will answer this point. I cannot believe that the loss of revenue here would be very great, but it will certainly be more than counterbalanced by the additional health services which will be made available.
Finally, an argument which was used particularly by the hon. Member for Willesden, West was the argument centring on queue-jumping and two standards of service. This was a serious argument which should be answered.
Any hon. Member will recognise that there are many standards of service already in the Health Service. Some hospitals are better than others; some have better facilities than others. There will always be many standards of service and to some extent priorities which are not entirely justified on medical grounds. Can any hon. Member really say that when we ourselves have to go into hospital we do not get some priority in


the Health Service? Of course we do. In an imperfect world this type of thing will always exist.
Finally, what matters is how we can raise standards of service and deal more effectively with mounting needs. Here, in the case of the private sector, one has not only additional resources coming in to relieve pressure on the Health Service, but also in many respects a pace setter for it.
The next argument of the hon. Member for Willesden, West was that the more private schemes of this kind increased the more they would tend to draw off scarce medical resources, including doctors and nurses. I agree that this is not easy to prove one way or the other, but I am doubtful about the validity of the argument. We already have a drain of doctors from the country and one of the reasons is that there is not sufficient variety of work.
Can anyone say that if the private sector were increased we might not find that doctors would be more inclined to stay here and perhaps that some of those now abroad would not return? It is the same case with nurses. I have met, as have other hon. Members, nurses working in private hospitals who, for a variety of reasons, are not prepared or able to work in the Health Service. Were these private institutions not to exist they would probably be lost to nursing altogether. I do not accept the validity of the argument on cost, on two standards of service, or on drawing off of scarce medical resources.
Now, finally—[Interruption.] I am sorry that some hon. Members—they appear to be on the Liberal bench—do not seem interested in life assurance policies. It is as well to get it on record that this should seem to be the case.
Finally——

Mr. R. B. Cant: On a point of order. This is the fifth final point that the hon. Gentleman has made. For the enlightenment of the Committee, could he classify those points before he sits down?

Mr. Dean: I am sorry that the hon. Member also does not appear to be particularly interested in this subject. I am

coming to the point the Chief Secretary raised about the analogy concerning life assurance. He said that life assurance has been in existence for a century. From a Treasury Minister that is a poor argument for the rejection of the Clause.
If one looks at it from the point of view of the individual, there is a great similarity between life assurance and insurance for health. The time is rapidly coming when people who insure themselves for life will also take out medical insurance policies as well. The two are coming closer together in the minds of persons concerned, although they do not appear to be in the mind of the Treasury. But no one would deny a man the right of providing for his dependants on the untimely death of the breadwinner over and above the National Insurance Scheme. Indeed, the State encourages it through tax relief. Where is the difference in providing for oneself and one's dependants in the event of illness? It seems a strange logic to encourage insurance for death benefit, but not for life and health.
The tax relief for health services provided by the individual ought to go hand in hand with taxation for the health services provided by the State, so that there is a partnership between the two. If we could extend that partnership, not only would the principle be right, but it would be in the best interests of the Health Service. I hope that before the debate ends the Chief Secretary will deal more effectively with the arguments which have been put from this side of the Committee.

10.15 p.m.

Mr. Dance: Most hon. Members will be very grateful when I say that I shall be extremely brief. The Chief Secretary said that life assurance had been going on for a century. It was extraordinary to hear from the Government, who are supposed to be modern in their thinking, that they will not modernise their thinking about another form of insurance, namely, support of B.U.P.A.
It has been said that the private sector of the health services jams the waiting lists. I want to give the Committee some facts about what happened in my own family. On 2nd January, my wife fell down at home and fractured her hip. She was taken to Warwick Hospital


by the ordinary ambulance and she was put in a public ward which was very overcrowded. With the aid of B.U.P.A.—and I certainly could not have afforded it without B.U.P.A.—three days later I was able to get her into a private nursing home. That made that bed available.
Was that not worth while? Was not that a good thing to do? Is it not a good idea, if one is able to pay a certain amount of premium, to help the National Health Service, which is what this was doing? Is there anything wrong with that? I think that it is the right thing to do. The Treasury should give assistance to people who help themselves and in turn try to help the National Health Service. Is there any great argument against that?
The Chief Secretary went on to say that people could spend their money how they liked. I persuaded my children, some of them jolly hard up, to take out a B.U.P.A. insurance. They could ill afford to do so and would rather have had a washing machine or a television set. But because they saw the sanity of taking out one of these policies, they did so, at great hardship to themselves. Why should they not have the some sort of benefit of tax relief as people taking out life assurances?

Mr. Lubbock: The hon. Gentleman is suggesting that the choice which his children had was between B.U.P.A. and the washing machine. Why not equally tax relief on the buying of the washing machine?

Mr. Dance: That was a typical Liberal remark, one we would expect from the Liberal benches.

Mr. Lubbock: What about it?

Mr. Dance: I am certain that the Chief Secretary will realise that I am dealing with a serious matter and will not be confused by what the hon. Gentleman has said. This is a form of insurance which should get tax relief as do the endowment policies which can be taken out to help with the education of one's children.

Mr. Lubbock: What about the washing machine?

Mr. Dance: There are various other types of life assurance in respect of which tax relief is granted.

Mr. Lubbock: Why not washing machines?

Mr. Dance: I hope that HANSARD will record this nonsense which is being uttered from the Liberal benches, because this is so typical of how the Liberals behave. They are useless. Does not the Chief Secretary think that there is——

Mr. Lubbock: Why not washing machines?

The Temporary Chairman: Order. I must ask hon. Members not to interrupt from a seated position.

Mr. Dance: Thank you, Mr. Brewis. I would not have detained the Committee for as long as his, had it not been for this Liberal nonsense. Does not the Chief Secretary realise that there is a parallel between life assurance, endowment assurance and assistance to people who try to provide for their health and provide for hospital facilities which help the National Health Service? Is there not a very strong argument for giving some tax relief to people who are prepared to look after the future, look after their health, and pay their own contributions? Are not they entitled to some relief?

Mr. Maurice Macmillan: We have worked very hard for some time now, but have got very little from the Chief Secretary, who was as negative, doctrinaire and almost theological as most of the arguments made from the Government Benches have been during the course of the whole debate. The Chief Secretary based most of his argument on an Income Tax principle which has been totally destroyed by changing investment allowance to investment grant.
I will not elaborate, because my right hon. and hon. Friends have destroyed the Chief Secretary's argument. All that the right hon. Gentleman could bring to the arguments that were adduced was to give a spirited imitation of Tweedledum and Tweedledee alternately saying "Nohow" and "Contrariwise". Because of the weakness of the case made by the right hon. Gentleman, I must advise the Committee to divide. I ask my right hon. and hon. Friends to support the Second Reading of the Clause.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 84, Noes 160.

Division No. 85.]
AYES
 [10.22 p.m.


Alison, Michael (Barkston Ash)
Gurden, Harold
Osborne, Sir Cyril (Louth)


Allason, James (Hemel Hempstead)
Hall, John (Wycombe)
Percival, Ian


Atkins, Humphrey (M't'n & M'd'n)
Hamilton, Michael (Salisbury)
Pike, Miss Mervyn


Batsford, Brian
Harris, Frederic (Croydon, N.W.)
Pink, R. Bonner


Bell, Ronald
Hawkins, Paul
Prior, J. M. L.


Birch, Rt. Hn. Nigel
Hogg, Rt. Hn. Quintin
Pym, Francis


Black, Sir Cyril
Hordern, Peter
Ridsdale, Julian


Body, Richard
Hornby, Richard
Rossi, Hugh (Hornsey)


Boyd-Carpenter, Rt. Hn, John
Hunt, John
Sharples, Richard


Braine, Bernard
Hutchison, Michael Clark
Shaw, Michael (Sc'b'gh & Whitby)


Brinton, Sir Tatton
Irvine, Bryant Godman (Rye)
Smith, John


Brown, Sir Edward (Bath)
Johnson Smith, G. (E. Grinstead)
Stainton, Keith


Buck, Antony (Coichester)
Jones, Arthur (Northants, S.)
Taylor, Sir Charles (Eastbourne)


Burden, F. A.
Joseph, Rt. Hn. Sir Keith
Taylor, Edward M. (G'gow,Cathcart)


Chichester-Clark, R.
Kaberry, Sir Donald
Taylor, Frank (Moss Side)


Cooke, Robert
King, Evelyn (Dorset, S.)
Thatcher, Mrs. Margaret


Costain, A. P.
Kirk, Peter
van Straubenzee, W. R.


Crawley, Aidan
Knight, Mrs. Jill
Vaughan-Morgan, Rt. Hn. Sir John


Crouch, David
Lewis, Kenneth (Rutland)
Vickers, Dame Joan


Dance, James
McAdden, Sir Stephen
Walker-Smith, Rt. Hn. Sir Derek


Dean, Paul (Somerset, N.)
Macleod, Rt. Hn. Iain
Webster, David


Deedes, Rt. Hn. W. F. (Ashford)
Maxwell-Hyslop, R. J.
Wells, John (Maidstone)


Elliott, R. W. (N'c'tie-upon-Tyne,N.)
Maydon, Lt.-Cmdr. S. L. C.
Whitelaw, William


Eyre, Reginald
Monro, Hector
Wills, Sir Gerald (Bridgwater)


Fisher, Nigel
More, Jasper
Wilson, Geoffrey (Truro)


Fletcher-Cooke, Charles
Morgan, W. G. (Denbigh)
Wylie, N. R.


Glover, Sir Douglas
Mott-Radclyffe, Sir Charles



Goodhew, Victor
Neave, Airey
TELLERS FOR THE AYES:


Griffiths, Eldon (Bury St. Edmunds)
Nott, John
Mr. Blaker and Mr. Grant.




NOES


Abse, Leo
Gray, Dr. Hugh (Yarmouth)
Mackenzie, Alasdair (Ross&Crom'ty)


Alldritt, Walter
Grey, Charles (Durham)
Mackenzie, Gregor (Rutherglen)


Anderson, Donald
Griffiths, Rt. Hn. James (Llanelly)
Mackintosh, John P.


Archer, Peter
Griffiths, Will (Exchange)
Maclennan, Robert


Atkins, Ronald (Preston, N.)
Grimond, Rt. Hn. J.
MacPherson, Malcolm


Bacon, Rt. Hn. Alice
Hamling, William
Mahon, Peter (Preston, S.)


Barnes, Michael
Hannan, William
Mahon, Simon (Bootle)


Bessell, Peter
Harper, Joseph
Marquand, David


Binns, John
Harrison, Walter (Wakefield)
Marsh, Rt. Hn. Richard


Bishop, E. S.
Hazell, Bert
Mellish, Robert


Booth, Albert
Henig, Stanley
Mikardo, Ian


Boston, Terence
Herbison, Rt. Hn. Margaret
Millan, Bruce


Bowden, Rt. Hn. Herbert
Hilton, W. S.
Miller, Dr. M. S.


Bray, Dr. Jeremy
Hooley, Frank
Mitchell, R. C. (S'th'pton, Test)


Butler, Herbert (Hackney, C.)
Horner, John
Molloy, William


Callaghan, Rt. Hn. James
Howarth, Robert (Bolton, E.)
Morris, Charles R. (Openshaw)


Cant, R. B.
Howie, W.
Morris, John (Aberavon)


Chapman, Donald
Hughes, Rt. Hn. Cledwyn (Anglesey)
Murray, Albert


Concannon, J. D.
Hughes, Hector (Aberdeen, N.)
Neal, Harold


Cronin, John
Hughes, Roy (Newport)
Noel-Baker, Francis (Swindon)


Crosland, Rt. Hn. Anthony
Hunter, Adam
Norwood, Christopher


Crossman, Rt. Hn. Richard
Hynd, John
Ogden, Eric


Davidson, Arthur (Accrington)
Irvine, A. J. (Edge Hill)
Oram, Albert E.


Davies, Dr. Ernest (Stretford)
Jeger, George (Goole)
Orbach, Maurice


Davies, Harold (Leek)
Jeger,Mrs.Lena (H'b'n&St.P'cras,S.)
Orme, Stanley


Davies, Robert (Cambridge)
Jenkins, Hugh (Putney)
Oswald, Thomas


Dewar, Donald
Johnson, Carol (Lewisham, s.)
Page, Derek (King's Lynn)


Diamond, Rt. Hn. John
Johnston, Russell (Inverness)
Palmer, Arthur


Doig, Peter
Jones, J. Idwal (Wrexham)
Pardoe, John


Driberg, Tom
Judd, Frank
Park, Trevor


Dunnett, Jack
Kenyon, Clifford
Parker, John (Dagenham)


Dunwoody, Mrs. Gwyneth (Exeter)
Kerr, Mrs. Anne (R'ter & Chatham)
Parkyn, Brian (Bedford)


Edwards, Robert (Bilston)
Kerr, Dr. David (W'worth, Central)
Pearson, Arthur (Pontypridd)


Ellis, John
Kerr, Russell (Feltham)
Perry Ernest G. (Battersea, S.) '


Ennals, David
Lee, Rt. Hn. Jennie (Cannock)
Price, Thomas (Westhoughton)


Ensor, David
Lester, Miss Joan
Price, William (Rugby)


Fitch, Alan (Wlgan)
Lewis, Arthur (W. Ham, N.)
Redhead, Edward


Fletcher, Raymond (Ilkeston)
Lubbock, Eric
Roberts, Goronwy (Caernarvon)


Fletcher, Ted (Darlington)
Mahon, Dr. J. Dickson
Roberts, Gwilym (Bedfordshire, S.)


Floud, Bernard
McCann, John
Robinson, W. O. J. (Walth'stow, E.)


Foley, Maurice
MacColl, James
Rodgers, William (Stockton)


Fraser, John (Norwood)
MacDermot, Niall
Roebuck, Roy


Fraser, Rt. Hn. Tom (Hamilton)
Macdonald, A. H.
Rogers, George


Gardner, A. J.
McGuire, Michael
Ross, Rt. Hn. William


Gourlay, Harry
McKay, Mrs. Margaret
Rowlands, E. (Cardiff, N.)




Ryan, John




Sheldon, Robert
Symonds, J, B.
Willey, Rt. Hn. Frederick


Short, Rt. Hn.Edward (N'c'tle-u-Tyne)
Thorpe, Jeremy
Williams, Alan Lee (Hornchurch)


Short, Mrs. Renée (Whampton.N.E.)
Tinn, James
Williams, Mrs. Shirley (Hitchin)


Silkin, John (Deptford)
Tomney, Frank
Willis, George (Edinburgh, E.)


Silkin, S. C. (Dulwich)
Wainwright, Richard (Colne Valley)
Winnick, David


Silverman, Julius (Aston)
Walden, Brian (All Saints)
Zilliacus, K.


Snow, Julian
Wallace, George



Spriggs, Leslie
Wellbeloved, James
TELLERS FOR THE NOES:


Steel, David (Roxburgh)
W hi taker. Ben
Mr. McBride and Mr. R. W. Brown

New Clause.—(AMENDMENT OF SECTIONS 214 AND 218 OF INCOME TAX ACT 1952.)

In section 214 of the Income Tax Act 1952 (which refers to a person taking charge of a widower's or widow's children or acting as his or her housekeeper) as amended, and in section 218 of the said Act (which refers to a person employed or maintained to take charge of children) as amended if the claimant is liable to pay employer's part of the National Insurance contribution in respect of the person for whose services he is claiming relief, for the references to £75 in each of the said sections, there shall be substituted references to £130.—[Miss Pike.]

Brought up, and read the First time.

Miss Mervyn Pike: I beg to move, That the Clause be read a Second time.

The Temporary Chairman (Mr. John Brewis): I think that it would be for the convenience of the Committee if we took with this Clause, new Clause 25 and new Clause 55.

Miss Pike: The Committee will be glad at this stage of the proceedings that I can be fairly brief, because I am assured, having listened to the Chief Secretary in the previous debate, that he will allow us to have this Clause at this time. He will recollect that not more than half an hour ago he stated categorically, that one of the main principles of taxation, and one which he was standing by very firmly at this time, was that those with the heaviest burdens should pay the least tax.
Therefore, I am assured that we need not go into any great depth of argument, because he himself will readily recognise the justice of the case that we are putting forward. Equally, I do not need at this stage to argue the principle, because the principle of this allowance has been readily conceded for a long time. All we are asking for in this new Clause is a very modest increase of £55 in the allowance, which has not been changed since 1960.
I am one of those people who believe that the allowance, anyway, has always been too meagre, and I speak with some experience. I am not a widow, and I do not have children of my own, but I am the daughter of a widow. My mother was widowed at the age at which

I am now. She was widowed at the age of 47, when my brother and I were at the most expensive period of our lives, and our education and the whole of our future was in doubt. I know from personal experience the difficulties of a person who has not been in employment before, who has to go out and find employment to try to increase the prosperity of the family, to try to increase the income of the family, so as to give the family a decent start in life.
In those days, the Income Tax allowance was £50 a year, which was a very meagre allowance, but by present standards I expect that it was generous. Of course, there are several factors which add to the increased burden which the Chief Secretary has so readily conceded is one of his guiding principles. In the first place, where the father or the mother is alone in trying up bring up the family, there is often a certain amount of compensation, which I believe must be supplied if the children are to have the same opportunities and the same start in life. They are deprived of their mother or their father, and by the very nature of things it is, to some extent, only half a family.
I am most concerned with the mother in these instances, and another factor is that the mother has to go out to work, very often not having been out before, or not for some time. That is another strain on the family, and the mother feels the urge to give greater compensation and make certain that her children are not at a disadvantage compared with their friends when it comes to holidays and all the things which mean a lot in the lives of young children.
Then there is the great difficulty which arises from the fact that women cannot equal the previous living standards of their families by their own earnings. We still have not got equal pay and a situation where most women have the training, opportunities and qualifications to go out and earn equally in the labour market. Apart from anything else, they are at a disadvantage in terms of earnings and their families' incomes and living standards are reduced considerably.
Again, many of us depend on the services of a housekeeper, and, good though she may be, it is always more


expensive to have someone else looking after one's household affairs. She is probably less frugal and careful. She requires better conditions than would a wife. I am thinking of the case of a widower left to bring up a family. Most housekeepers want their own rooms, television sets and, very often, much easier standards than a wife would require. It is always more expensive to run a house with a housekeeper or child minder, however good that person may be.
The case was argued convincingly in 1963 by right hon. and hon. Members opposite when they were in opposition. At that time, they argued for something broader than I am asking for tonight. They deployed their arguments very cogently. During the course of the debate, the right hon. Member for Sowerby (Mr. Houghton) said:
… we are asking the Government … to do something, and if they wish to vindicate the reputation which they hope to establish for generous administration of Income Tax they will accept these Amendments.
The present Government are at the beginning of their term, and I would ask them to try to establish this reputation as well.

Mr. Diamond: It so happens that I have not that volume of the OFFICIAL REPORT before me. Could the right hon. Lady refresh my memory by telling me what happened at the end of the debate?

Miss Pike: I am sure that is within the recollection of the right hon. Gentleman. But things move forward, and there is no reason why the right hon. Gentleman should not remember the arguments that he advanced and tonight allow us to carry the new Clause.
If the right hon. Member for Sowerby does not carry all that much weight with his right hon. and hon. Friends, I feel sure that the right hon. Member for Blackburn (Mrs. Castle) has considerable influence inside the Cabinet. So perhaps I might make a short quotation from what she had to say at that time:
This housekeeping allowance was £50 before the war. It is only £75 today. Can we in all conscience say that it has been increased pro rata to the absolutely fantastic increase in the cost of living?
I will refer later to the still more fantastic increase in the cost of living which we are experiencing at present.
The right hon. Lady went on:
Are we not in fact progressively worsening the position of widows and widowers with children who need to employ this kind of help? Are we, therefore, not increasing the violent sense of injustice they feel through being classed as single persons when they have inherited these domestic responsibilities?"—[OFFICIAL REPORT, 15th May, 1963; Vol. 677, c. 1458–66.]
For once, I am in complete agreement with the right hon. Lady, because we all know the justice of the case. It is not only that normal living costs have increased. The value of money has dropped dramatically in the last three years, since these arguments were first put forward. Under this Government the value of the £ has gone down by another 1s. 6d., thus adding another burden to those who are managing on a very meagre income, with a very narrow margin between what is an acceptable standard, and what is a tremendous hardship and difficulty.
The cost of living has also risen. Since 1964, the Retail Price Index has risen by 8· 9 points, and the cost of living by 8· 2 per cent. Not only has the general index risen, but one of the important components of this, the cost of food, has risen by 10 points or 9· 2 per cent.
Those who were awake this mornnig to hear the nine o'clock news, or were sufficiently alive to take in what was said, will remember that, according to the recent Ministry of Labour survey, not only is food costing more, but the average expenditure on food is 6s. a week more for the average family. Our standards as a whole are going up, and the survey goes on to say how expenditure on clothing, transport, and all the things that loom so large in the household budget are going up at the present time.
The cost of the stamp has increased for those who employ housekeepers or child minders. Since 1964 the cost of the stamp has gone up by 2s. 10d. a week for the employer's share of the cost of the stamp. It is no good the right, hon. Gentleman saying that the personal earnings allowance has gone up to compensate for these things. These people are being compared with people who would not necessarily, in similar circumstances, have to employ an expensive housekeeper.
They are having to employ people who are scarce to get in the labour market.
Their wages are high because of the scarcity of supply, and all the time expenses are rising rapidly. Taxation, too, has increased, bringing an added burden to these people. These are the real reasons why we must at this time press the Government to concede this essential act of justice.
I am sure that I do not need to go on giving examples to the Committee. We all know from experience in our constituencies that we should be giving more help to this class of people. In a society where people have greater opportunities than ever before, these are the families who, on the whole, are tending to lag behind.
New Clause 55 goes further and asks that the housekeeper should not necessarily be resident. I do not wish to take anything from any of my hon. Friends' speeches, although I have been frustrated by not having the freedom of the back benches during these long debates. Having got to my feet now, I am inclined to deploy all the arguments that I have at my disposal, because this may be my last chance of taking part in these debates.
If the Government are not prepared to make this concession about the residential qualification, it makes my case even stronger. It is more difficult now than ever before to get residential help. It is more expensive than ever before to get the type of person who is willing to live in. It is more expensive than ever before to try to give them the sort of living conditions which they demand.
This same new Clause also requests that another category of deserving people should have this special attention, namely, elderly parents who are being looked after in the family. This is something that we have to look at very carefully. We are trying to keep families together. We are trying to make certain that these old people do not become a burden on the State, with all that this means in terms of weakening our economy, and, more important, all that it means in terms of the emotional life of the family itself.
If the Chief Secretary was sincere in what he said during previous debates about his priorities in taxation, and if he looks carefully at the increased burden

which has fallen on these people, he will have no hesitation in accepting this very modest increase in their tax allowance.

10.45 p.m.

Mr. Diamond: The hon. Lady the Member for Melton (Miss Pike), who speaks with knowledge and with such obvious sincerity in these matters, has made a powerful case for increasing the housekeeper allowance. The hon. Lady has pointed out, correctly, that it was fixed at its present figure in 1960 and she went on to demonstrate—I accept what she has said—that costs have risen since then and that it is now more expensive to employ a housekeeper in the circumstances in which the various Income Tax allowances are granted than it then was.
The hon. Lady has been good enough to quote what I said a little earlier about sharing the burden on the basis that the broader shoulders carry the larger burden, as is an essential element of justice. I pointed out, however, two things of which I may, perhaps, remind her. I am dealing with the matter shortly because I feel that those of us who have taken part in the debates in the last day or two, or whatever period it is—some of us are a little less clear about whether it is days, nights or whatever it is—would not wish to detain the servants of the House too late tonight having regard to the great ardours to which they have had to submit in recent times.
The first of the two points which I made on an earlier new Clause was one which I dealt with in all the pristine purity of my approach to tax principles, but it would be appropriate to remind the Committee of it. The essential point about the structure of taxation reliefs is not that the allowances represent the cost of maintaining the various employees, housekeepers or whatever may be the case, but that it is a system which provides a just sharing of the burden as between different persons according to the responsibilities which they have to carry. It is not, therefore, the case that the housekeeper allowance pretends to represent the cost of maintaining a housekeeper or the increased cost of maintaining a housekeeper.
If one were to grant an increase in the housekeeper allowance, it would immediately put out of the just distribution of the burden to which the hon. Lady has


referred all those who have other responsibilities for which allowances are granted under the Income Tax Acts, but in which no one is appealing for an increase. For there to be justice, there would have to be an increase not only in the housekeeper allowance, but in a whole variety of allowances. I am sure that we would all accept that. We would all welcome it if it were possible. I regret to say, however, that it just is not possible. The cost involved is not merely the cost involved in this specific housekeeper allowance, but the cost of all the other allowances which one would have to increase to maintain a just sharing of the burden.
My right hon. Friend the Chancellor of the Exchequer has made it clear that this is a year when, as our recent debates on Selective Employment Tax have shown, additional revenue has to be collected. It is, unfortunately, not a year in which it is possible to give substantial increases in a variety of allowances, which would have to be the case if one were to accept this very substantial rateable increase in the housekeeper allowance and marry it with the other allowances that have to go with it.
Because of that, because of the essential need to keep the burden of taxation justly spread between all those who have dif-

ferent responsibilities, some of them in connection with housekeepers, which we recognise and with which we sympathise, and others with other kinds of responsibilities which are not covered by the Amendment, I am bound to tell the Committee that we could not, unfortunately, recommend that the Clause should be adopted.

Miss Pike: I will not burden the Committee with another speech about the justice of this case, but I would point out to the Chief Secretary that justice is not confined to uniformity. To give justice to one section of the population one does not have to raise the level all over the board. If one is concerned with justice one is more concerned with priorities than with uniformity. In this case, in this year of financial difficulty, rising costs and taxation, inflation, and difficulty throughout the economy, I would say that this is just the sort of family which will be at the greatest risk. If we cannot now give it extra help we are not meting out justice.

For those reasons, I hope that my hon. Friends will take the matter to a Division.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 83, Noes 130.

Division No. 86.]
AYES
 [10.51 p.m.


Alison, Michael (Barkston Ash)
Gurden, Harold
Pardoe, John


Allason, James (Hemel Hempstead)
Hall, John (Wycombe)
Percival, Ian


Atkins, Humphrey (M't'n & M'd'n)
Hamilton, Michael (Salisbury)
Pike, Miss Mervyn


Batsford, Brian
Harris, Frederic (Croydon, N.W.)
Pink, R. Bonner


Bell, Ronald
Hawkins, Paul
Prior, J. M. L.


Black, Sir Cyril
Hogg, Rt. Hn. Quintin
Pym, Francis


Body, Richard
Hordern, Peter
Ridsdale, Julian


Boyd-Carpenter, Rt. Hn. John
Hornby, Richard
Rossi, Hugh (Hornsey)


Braine, Bernard
Hunt, John
Sharples, Richard


Brinton, Sir Tatton
Hutchison, Michael Clark
Shaw, Michael (Sc'b'gh & Whitby)


Brown, Sir Edward (Bath)
Irvine, Bryant Godman (Rye)
Smith, John


Buck, Antony (Colchester)
Johnson Smith, G. (E. Grinstead)
Stainton, Keith


Burden, F. A.
Johnston, Russell (Inverness)
Taylor, Sir Charles (Eastbourne)


Chichester-Clark, R.
Jones, Arthur (Northants, S.)
Taylor, Edward M. (G'gow,Cathcart)


Cooke, Robert
King, Evelyn (Dorset, S.)
Taylor, Frank (Moss Side)


Costain, A. P.
Kirk, Peter
Thatcher, Mrs. Margaret


Crawley, Aidan
Knight, Mrs. Jill
Thorpe, Jeremy


Crouch, David
Lewis, Kenneth (Rutland)
Vaughan-Morgan, Rt. Hn. Sir John


Dance, James
Lubbock, Erie
Vickers, Dame Joan


Dean, Paul (Somerset, N.)
Mackenzie, Alasdair (Ross&Crom'ty)
Walker-Smith, Rt. Hn. Sir Derek


Deedes, Rt. Hn. W. F. (Ashford)
Macleod, Rt. Hn. Iain
Webster, David


Elliott, R.W. (N'c'tle-upon-Tyne, N.)
Maxwell-Hyslop, R. J.
Wells, John (Maidstone)


Eyre, Reginald
Maydon, Lt.-Cmdr. S. L. C.
Whitelaw, William


Fisher, Nigel
Monro, Hector
Wills, Sir Gerald (Bridgwater)


Fletcher-Cooke, Charles
More, Jasper
Wilson, Geoffrey (Truro)


Glover, Sir Douglas
Morgan, W. G. (Denbigh)



Goodhew, Victor
Mott-Radclyffe, Sir Charles
TELLERS FOR THE AYES:


Gresham Cooke, R.
Neave, Airey
Mr. Anthony Grant and


Griffiths, Eldon (Bury St. Edmunds)
Nott, John
Mr. Peter Blaker.




NOES


Anderson, Donald
Bacon, Rt. Hn. Alice
Bishop, E. S.


Archer, Peter
Barnes, Michael
Booth, Albert


Atkins, Ronald (Preston, N.)
Binns, John
Boston, Terence




Bray, Or. Jeremy
Howie, W.
Ogden, Eric


Brown, R. W. (Shoreditch & F'bury)
Hughes, Rt. Hn. Cledwyn (Anglesey)
Oram, Albert E.


Callaghan, Rt. Hn. James
Hughes, Hector (Aberdeen, N.)
Orbach, Maurice


Cant, R. B.
Hughes, Roy (Newport)
Orme, Stanley


Chapman, Donald
Hunter, Adam
Oswald, Thomas


Concannon, J. D.
Hynd, John
Palmer, Arthur


Cronin, John
Irvine, A. J. (Edge Hill)
Park, Trevor


Crosland, Rt. Hn. Anthony
Jeger, George (Goole)
Parker, John (Dagenham)


Crossman, Rt. Hn. Richard
Jeger, Mrs. Lena (H'b'n&St.P'cras,S.)
Parkyn, Brian (Bedford)


Davidson, Arthur (Accrington)
Jenkins, Hugh (Putney)
Pearson, Arthur (Pontypridd)


Davies, Dr. Ernest (Stretford)
Johnson, Carol (Lewlsham, S.)
Perry, Ernest G. (Battersea, S.)


Davies, Harold (Leek)
Judd, Frank
Price, William (Rugby)


Davies, Robert (Cambridge)
Kerr, Mrs. Anne (R'ter & Chatham)
Redhead, Edward


Dewar, Donald
Kerr, Dr. David (W'worth, Central)
Roberts, Gwilym (Bedfordshire, S.)


Diamond, Rt. Hn. John
Kerr, Russell (Feltham)
Robinson, W. O. J. (Walth'stow, E.)


Driberg, Tom
Lestor, Miss Joan
Rodgers, William (Stockton)


Dunnett, Jack
Lewis, Arthur (W. Ham. N.)
Roebuck, Roy


Dunwoody, Mrs. Gwyneth (Exeter)
McBride, Neil
Rogers, George


Edwards, Robert (Bilston)
McCann, John
Ross, Rt. Hn. William


Ellis, John
MacColl, James
Ryan, John


Ennals, David
MacDermot, Niall
Sheldon, Robert


Ensor, David
Macdonald, A. H.
Short, Rt.Hn.Edward (N'c'tle-u-Tyne)


Fitch, Alan (Wigan)
McGuire, Michael
Short, Mrs. Renée (W'hampton.N.E.)


Fletcher, Raymond (Ilkeston)
McKay, Mrs. Margaret
Silkin, S. C. (Dulwich)


Fletcher, Ted (Darlington)
Mackenzie, Gregor (Rutherglen)
Silverman, Julius (Aston)


Floud, Bernard
Maclennan, Robert
Tinn, James


Foley, Maurice
MacPherson, Malcolm
Tomney, Frank


Fraser, John (Norwood)
Mahon, Peter (Preston, S.)
Walden, Brian (All Saints)


Gardner, A. J.
Mahon, Simon (Bootle)
Wallace, George


Gray, Dr. Hugh (Yarmouth)
Marquand, David
Wellbeloved, James


Grey, Charles (Durham)
Mellish, Robert
Whltaker, Ben


Griffiths, Rt. Hn. James (Llanelly)
Mikardo, Ian
willey, Rt. Hn. Frederick


Hamling, William
Millan, Bruce
Williams, Alan Lee (Hornchurch)


Hannan, William
Miller, Dr. M. S.
Williams, Mrs. Shirley (Hitchin)


Hazell, Bert
Mitchell, R. C. (S'th'pton, Test)
Willis, George (Edinburgh, E.)


Heffer, Eric S.
Molloy, William
Winnick, David


Henig, Stanley
Morris, Charles R. (Openshaw)
Zilliacus, K.


Herbison, Rt. Hn. Margaret
Morris, John (Aberavon)



Hilton, W. S.
Murray, Albert
TELLERS FOR THE NOES:


Hooley, Frank
Neal, Harold
Mr. Neil McBride and


Horner, John
Noel-Baker, Francis (Swindon)
Mr. R. W. Brown.


Howarth, Robert (Bolton, E.)
Norwood, Christopher

The Chancellor of the Exchequer (Mr. James Callaghan): I beg to move,
That the Chairman do report Progress and ask leave to sit again.
I am sure that it will be agreed on all sides of the Committee that we have made reasonable progress today and that we should now adjourn.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.

PROBATION SERVICE (MERTHYR TYDFIL)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitch.]

11.0 p.m.

Mr. S. O. Davies: I have been compelled to raise the subject matter of the Adjournment because of the wanton and completely irresponsible action of the Home Secretary in destroying the probation service in my constituency. I must tell the House that in the 32 years that I have

been a Member of the House, never have I seen a more pathetic demonstration of how certain Ministers, of whom the Home Secretary is one—and this must be said at long last—love to strut in their exaggerated sense of self-importance at that Box when they are in fact the mere robots of those unnamed, un-elected and unrepresentative people who are the decisive bosses of so many important Ministries. This must be said, and one of the reasons why I am protesting against this uncalled-for attack on our local probation service is that it reveals clearly the charges which I have just made.
The trouble first began when the present Opposition were the Government. The then Home Secretary, Mr. Henry Brooke, and I had discussions on this matter and he readily agreed to receive a deputation, which consisted of the Chairman and the Secretary—that is, our magistrates' clerk—to discuss the matter with him. The Chairman was also a member of the National Council of the Probation Service—a man, and nobody knows better than I, of great knowledge and public service.
On his own initiative, Mr. Brooke kept the deputation for nearly an hour and he asked them many questions. It was obvious that he was deeply impressed by the deputation and accepted that our service in Merthyr Tydfil was a very efficient service.
We were therefore left alone until a change of Government took place and Sir Frank Soskice became Home Secretary. Not a word had passed between him and me about our probation service until the beginning of our long Parliamentary Summer Recess last year—and I ask the House to take note of that. A letter—I must put it as crudely as it was done—was pushed under his nose for signature. He was completely ignorant of its contents. It was sent to me as soon as we Members had dispersed for the three long months of our Summer Recess.
Of course, I took the strongest exception not only to the contents of the letter but to the way in which it had been done, and I told Sir Frank Soskice so in no uncertain language. No one was more surprised than he when he realised that his signature was attached to a letter of such importance—the destruction of our probation service in Merthyr Tydfil. After this conversation we were again left alone until the present Home Secretary was appointed. He, or those who had him in charge, repeated the threat of destroying our probation service, immediately the House dispersed for last Christmas Recess. That was a period of five weeks less one day.
A letter was placed under his nose and he, completely ignorant of its importance, signed it. To him I described the timing of this letter as being cowardly and disgraceful on the part of a Home Secretary in a matter of such importance. On no occasion—I want to emphasise this—was this service in my constituency adversely criticised. On the contrary, it was always highly praised. When questioned as to why they wanted to destroy it by burying it in the administrative county of Glamorgan, the Home Office's first excuse was a certain recommendation in the Morison Committee's Report. When it was made abundantly clear that that recommendation was not absolute, was not made without exceptions, and that those exceptions clearly

applied to my constituency, that excuse was abandoned.
But I must say—and I am glad that the right hon. Lady the Minister of State is here—that this was an extraordinary situation, that at least three private secretaries were carrying on correspondence either with myself or the magistrates' clerk and it was obvious that not one of them knew what the other two were doing. Not one of these letters bore the signature of the Minister of State or of one of the Under-Secretaries of State, Home Office, although they all came from the Horseferry section of the Home Office.
I have always worked in the closest co-operation with our probation service. I know how devoted to that service are the officers and also their committee. They are all local people, products of a most closely-knit community, who have the respect and confidence of the people, and this, in work of this nature, is of inestimable value to all concerned.
But now strange little fellows from the administrative county of Glamorgan run into our borough, where, in their childish ignorance, they tell our probation officers to write down every bit of work they do on every day of the week, and then see that a summary of the week's work is also prepared. This is absolutely, literally true. This is how the Home Secretary tries to persuade himself that the probation service in my constituency is being improved. But our probation officers, with their splendid record, cannot be expected to suffer such humiliation for long. The Home Secretary should take note of this. He must be fully aware that he has had no experience in local government and that he should exercise some caution, and much hesitation, before calling for destructive schemes, forced on him from the remote backwoods of the Home Office.
My grievance may seem a small matter to the House, but it is not. It is symptomatic of the Home Office today. The only virtue, if it is one, that appeals to that Ministry is size. The bigger the area covered by any service, the better. The growth of bureaucracy, not quality, is the thing that matters. In passing, I mention that this megalomania is dramatically seen in the first threatened step on the part of the Home Office of establishing in our


country a police state, but I will say no more about that at this point.
Why does not the Home Secretary realise that he has much to learn when he takes over the great and onerous responsibility as that of the Home Office? I have no hesitation in giving him this advice because I have never raised on the Floor of the House any matter of importance to my constituency without first seeing the Minister or Ministers concerned. I have often found this to be far more helpful than rushing to make noises in this Chamber.
It will be in the Department's interest to withdraw the threat I have discussed tonight. I hope that the Minister of State will at least appreciate that I have reduced the time taken for my remarks to the utter minimum to give her ample time in which to reply. I hope that, after her statement tonight, the Home Office will do the decent thing and leave our probation service alone.

11.13 p.m.

The Minister of State, Home Office (Miss Alice Bacon): I begin by paying tribute to my hon. Friend the Member for Merthyr Tydfil (Mr. S. O. Davies) for the vigour with which he always pursues constituency matters in the House. If, at times, his language is stronger than perhaps the occasion warrants, we all know that he has the Welsh fervour and Welsh blood in his veins.
What are the facts about the probation service in this area? As my hon. Friend said, on 1st April this year the Merthyr Tydfil probation area was combined with Glamorgan. Before the amalgamation took place, Glamorgan had 32 probation officers and Merthyr Tydfil had four, one of whom was a woman. There was no principal probation officer. The amalgamation arose, like other amalgamations, as a result of the recommendations of the Morison Committee on the Probation Service. That Committee reported in 1962, when there were 104 separate probation areas in England and Wales.
After a thorough-going survey of the structure and organisation of the service, the Committee found that the power of the Home Secretary to combine probation areas had been
… a major factor in ensuring efficient administration …

and decided that further combinations ought to be made. Briefly, its reasons were that an area service should be large enough to support a principal probation officer, to provide technical expertise and up-to-date leadership; to provide opportunity for the exchange of views and pooling of experience among the staff and to cope with fluctuations in the work. It thought that the minimum staff necessary to support a principal probation officer was six other officers, so it was recommended that unless there were exceptional circumstances any probation area which could not sustain a staff of six or more probation officers or a staff of which more than one was a woman should be merged into a larger unit.
Since the Committee reported, amalgamations have been made in 10 cases and the areas in Greater London have been re-drawn. These changes have reduced the number of probation areas in England and Wales to 84 and 59 of these areas are combined areas. Before leaving the general background and looking at the general case of Glamorgan and Merthyr Tydfil, I should like to add one thing. The Morison Committee recognised that there had often been, and would often be, opposition to combination from committees locally affected, but its inquiries confirmed the Home Office view that where amalgamation had been made against opposition the improvement in the local service was eventually generally recognised. I hope very much that this will happen in the present case.
I look now at the particular circumstances of Merthyr Tydfil and Glamorgan. I must stress first that the Order has already been made and was signed by the Home Secretary on 15th March this year and came into operation on 1st April this year. As my hon. Friend has said, successive Home Secretaries have allowed every possible opportunity for the Merthyr Tydfil Probation Committee and for my hon. Friend himself to make clear the grounds on which their opposition to the Order was based. Informal discussion about this began as early as 1958 and the combination was first officially proposed in May 1963. My hon. Friend has seen Ministers on two occasions and on the second he brought with him the chairman and secretary of the probation committee. I understand that when my hon. Friend saw the Home


Secretary, then Sir Frank Soskice, in August 1965, Sir Frank wrote saying that he had Anally decided in favour of combination.

Mr. S. O. Davies: No, the deputation met the Home Secretary of the Opposition party, which was then in Government. We were refused by the present Home Secretary.

Miss Bacon: In June, 1964, Mr. Henry Brooke, then Home Secretary, saw my hon. Friend and the chairman and secretary of the probation committee, and I understand, far from saying as my hon. Friend has said tonight that he did not agree that the Order was to be made, he said he had decided to make the combination Order.

Mr. Davies: No.

Miss Bacon: That is my information. However, that is by the way. The Order has been made for the reasons I have stated. The views of the probation committee have been clear to Ministers, and I hope that the main considerations on the Home Secretary's side are clear to the probation committee. I take a little exception to the fact that my hon. Friend thinks that documents and letters are put before Ministers who sign them willy-nilly without understanding them or seeing what is said in them. I assure him that at Ministerial level we give the greatest possible consideration to this and feel that it is in the best interests of the probation service in Merthyr Tydfil that this amalgamation should take place.
All the reasons which I quoted a moment ago as being behind the Morison Committee's recommendation applied to Merthyr Tydfil. The Morison Committee said that there should be six probation officers apart from the principal probation officer before a separate probation area was viable. In Merthyr there are only four officers. The Morison Committee said that there should be at least two women officers. In Merthyr there is only one woman.
Merthyr is in fact much the smallest county borough in England and Wales that remains a self-contained probation area. It has been alleged that amalgamation could not succeed because the narrow valleys running north and south

from Merthyr will impede travel. Again, it is said that the probation officers in Merthyr are so far from those in Glamorgan that any exchange of views or effective supervision would not be possible. It is in fact 23 miles from Cardiff to Merthyr, but Glamorgan officers are stationed within a few miles of Merthyr at Pontypridd, where the principal probation officer has his office, Aberdare and Caerphilly, in addition to the office at Merthyr Tydfil.
It has been suggested, for example, that under combination the magistrates in Merthyr who before March this year made up the probation committee would not stand in a sufficiently close relationship to the probation officers in Merthyr, and also that the new Probation Committee for the combined area would not be able to maintain satisfactory contact with the staff. This suggestion is directly contrary to the views of the Morison Committee, which found that probation committees of quite large counties were able to maintain satisfactory contact with staff.
But it is in the case committee, which has the function of reviewing the work of probation officers in individual cases, that the closest contact occurs between magistrates and probation officers; and the Merthyr justices, even after combination, will still have the function of providing their own case committee to review the work of the officers serving them.
It is true that the Merthyr justices after combination no longer have separate responsibility for the employment of staff and for finance and supply matters, but as partners in the combined area, with representation on the combined area committee, they can be consulted by the committee about any proposals specially affecting Merthyr Tydfil. In all other respects they will, through the case committee, be able to take the same interest in the Merthyr staff and the Merthyr probation cases as they have done hitherto.
Again, it has been objected that it will destroy the spirit of the Merthyr probation service if officers come from outside to supervise the Merthyr officers. Supervision can be represented as being tyrannical interference, but I must say that the supervision of a probation officer by a senior probation officer is the last kind


of supervision that I would ever expect to be called this.
The point of supervision is that, for modern social casework, with its improved techniques and its deepened understanding of human behaviour, it has been found necessary that the professional caseworker should be given help and relief by the detailed discussion of his cases with a trained supervisor. It is this kind of guidance that the senior officer gives to the probation officer. Before amalgamation there were no senior probation officers in Merthyr to give it.
All that has happened is that since 1st April of this year the probation officers in Merthyr, like those in Glamorgan, have been able to receive this kind of supervision by senior officers, to whom they can now turn for advice and help. If it is supervision and leadership by the principal probation officer that is objected to, I can only repeat that this was one of the main reasons why the Morison Committee felt that areas with fewer than six officers should be combined with larger areas. I feel quite sure that the principal probation officer of Glamorgan will exercise this supervision with the greatest tact.
The Home Secretary did not make the combination order in the exercise of some bureaucratic principle. He was fully alive to the local situation. But he thought it was completely wrong that a place like Merthyr Tydfil should be without the advantages which have been demonstrated over and over again throughout other probation areas in the country.
There is another important consideration. The probation service today is at the centre of the Government's penal policy. The functions of the voluntary after-care of prisoners which were formerly exercised by the discharged

prisoners' aid societies throughout the country have now been taken over by the probation service and, since 1st January, the probation service has also taken over the task of providing prison welfare officers inside prisons.
In the recent White Paper on Penal Reform, the Government look forward to probation officers exercising supervision in cases of earlier release on licence. This and other important developments make it absolutely essential for the probation service, already admired throughout the world as a pioneer in modern penal treatment, should be brought up to its greatest possible efficiency as a nationwide service.
It cannot be done unless the principles which have been tried and found fundamentally right wherever they have been applied are universally put into practice. I do not complain of the vigorous opposition my hon. Friend and his colleagues have put up, and I think he may certainly feel that he has made a magnificent effort in the cause of local autonomy as he sees it.
But I believe there is a point beyond which the fight cannot be prolonged without interfering with the service which it is designed to protect. This has been a long dispute, and I appeal to all concerned to come together now and devote all their energies to making probation really work within the new framework. Otherwise, we shall be doing less than justice to a great service which needs all the help we can give in tackling the vital tasks which the community lays upon it. I feel sure that in the new arrangement we have made probation in Merthyr Tydfil will be not only as good as it has been in the past but much more efficient too.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes past Eleven o'clock.